WASHINGTON - With its $25 billion buyout in legal limbo, Sallie Mae has been contacted by other investors potentially interested in acquiring the student lender, whose business has been hurt by the uncertainty.
Sallie Mae (formally SLM Corp.) yesterday reported a third-quarter loss of $344 million. In part, it blamed a new law that reduced by $20 billion federal subsidies to student lenders and soured its would-be buyers on the transaction, now being fought in court.
"We've got to sort out this merger mess. It's gone on too long," chairman Albert Lord said. "It ties our hands on day-to-day activities." Until the dispute is resolved, he said, Sallie Mae cannot negotiate with other potential buyers, pursue its own potential acquisitions, or buy back shares.
Terms of the buyout agreement with an investor group led by J.C. Flowers & Co. prohibit such activities.
Nevertheless, Lord said Sallie Mae has received expressions of interest from other possible buyers.
On Monday, Sallie Mae sued the investor group, which also includes Bank of America Corp. and JPMorgan Chase & Co., for attempting to back out of a $60-a-share cash offer. The investors say recent student-loan legislation and weaker economic conditions have made the price agreed upon in April unacceptable. A reduced offer of $50 a share expired Tuesday.