Private equiteers took a blow yesterday, when student lender SLM Corporation sued to force them to close a $25 billion buy-out deal. WSJ report here; NYT version here.
The lawsuit, in Delaware Chancery Court, turns on whether a "Material Adverse Effect" occurred after the parties signed their agreement. Blawgletter quoted the definition of MAE in the SLM papers on September 27 and before that parsed the MAE provisions from a faltering merger agreement involving Harman International.
We don’t count on a decision. The private equity outfits offered another (cheaper) deal to SLM and may go higher. If they lose, they may have to shell out a $900 million breakup fee. Settlement city, baby!
Barry Barnett
