Google "What happens when a bank hits $10 billion?" You'll find a good summary of the additional regulations that kick in once a bank (yes, ADS is now considered a bank by regulatory agencies) hits the $10 billion threshold.
Your guess is as good as mine, but it would not be shocking to find out that ADS was unable to comply with the increased regulations and scrutiny coming from federal government regulators. This to me seems like the most likely reason why a Citibank merger appears imminent.
For years, the message has been rapid growth, but less was explained about how ADS would beef up it's infrastructure to handle the new regulations and increased visibility. It seems that now the chickens have come home to roost.
Probably the best outcome for those trying to hang on with ADS would be a Citibank merger. That would at least help things to stabilize, because it feels like the company is in a free fall right now.