Breaking Up is Hard to Do for Sallie Mae and Her Suitors

RESTON, Va. – The chances of another suitor moving in and sweeping Sallie Mae off its feet are slim because of a huge $900 million break-up fee agreed to by the student loan giant and its acquirers. Under the $25 billion takeover agreement either side would be responsible to pay the other $900 million if they walked away from the deal. The huge fee, representing 3.6% of the deal, is unusually large for a break-up fee, making it highly unlikely that another party would come in and top the offer and pay the fee. The deal calls for a group headed by private equity funds J.C. Flowers and Friedman Fleischer & Lowe and bank giants J.P. Morgan Chase and Bank of America to take the former government sponsored enterprise private for $60 a share. The deal, which puts the dominant figure in the student loan market into the hands of two of its biggest competitors, JP Morgan and BofA, must still be approved by antitrust regulators at the U.S. Justice Department.