The unsolicited approach by hedge fund Canyon Capital Advisors Llc and hedge fund Platinum Equity Advisors Llc was highly conditional, Navient Corp. said on Monday and rejected the acquisition bid from February 15. The student loan portfolio operator dismissed the cash offer worth $12.5 per share, or $3.2 billion in total. The target firm, based in Wilmington, Delaware, said the expression of interest "substantially undervalues" it, translating to a premium of only 6.6% to the last closing price and 2.8% below the one-year volume-weighted average.
The management noted more due diligence was one of the conditions in the attempt by Canyon and Platinum, after "substantial" access was enabled for four months, and added they haven't addressed the potential change of control provisions in outstanding unsecured debt and warehouse financing facilities. The statement highlights the issue of litigation and regulatory clearances.
"Your advisor gave us an informal price range of $14-$15 per share. While our advisors informed you that they did not believe the range would be acceptable, we said we were prepared to provide additional due diligence on the basis that you would value the company above that range," said William Diefenderfer, board chairman of the company formerly known as the Student Loan Marketing Association or Sallie Mae, which is a different entity since 2014.
