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Sallie Mae sues to break off troubled merger deal, collect $900 million damages
By Angela McDaniels
Seattle, Oct. 9 - SLM Corp., also known as Sallie Mae, said it filed a lawsuit in Delaware Chancery Court on Monday against the buyer group that includes J.C. Flowers & Co., JPMorgan Chase and Bank of America.
The lawsuit seeks a declaration that the buyer group has repudiated its merger agreement with Sallie Mae, that no material adverse effect has occurred under the merger agreement and that Sallie Mae may terminate the merger agreement and collect damages of $900 million, according to a company news release.
On Sept. 26, the buyer group said it no longer planned to close the proposed deal to take the company private. After Sallie Mae threatened legal action, the buyer group presented a revised offer on Oct. 2 that lowered the price to $50 in cash plus 0.2694 of a warrant per Sallie Mae share from $60 in cash per share.
Sallie Mae said it notified the buyer group on Oct. 3 that all conditions to closing the deal had been satisfied and set Nov. 5 as the closing date of the merger.
In response, the buyer group asserted on Oct. 8 that the conditions had not been met because of, among other things, the occurrence of a material adverse effect.
"We regret bringing this suit. Sallie Mae has honored its obligations under the merger agreement. We ask only that the buyer group do the same. We are prepared to close under the contract the parties signed in April," Sallie Mae chairman Albert L. Lord said in the release.
Sallie Mae is the nation's leading provider of saving- and paying-for-college programs.
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