Sallie Mae?s $25 billion Takeover Clears Antitrust Hurdle

Student loan lender Sallie Mae (NYSE: SLM) said yesterday that its proposed deal to be acquired by a private equity firm, along with Bank of America and JPMorgan Chase, had cleared antitrust regulations.

Sallie Mae announced in April that it would be acquired by a consortium including J.C. Flowers & Co., Bank of America, and JPMorgan Chase. The three agreed to pay a total of $25 billion for student loan giant, with J.C. Flowers owning 50.2 percent and Bank of America and JPMorgan each owning 24.9 percent each.  J.C. Flowers has made a splash in the ARM recently with the proposed acquisition of Sallie Mae and a separate deal where it bought 25 percent of the outstanding shares of debt purchaser Encore Capital Group.

Over the past several years, Sallie Mae has expanded rapidly into the ARM industry through the acquisitions of major collection and debt purchasing players such as Pioneer Credit, General Revenue Corp., and Arrow Financial Services. In its latest earnings release, Sallie Mae reported revenue from collection activities of $65.5 million in the first quarter of 2007, putting it on pace to generate more than $250 million in collection revenue this year.

Specifically, Sallie Mae said it was informed by regulators Monday that the waiting period required under the Hart-Scott-Rodino Antitrust Improvements Act had expired.  The Act provides that before certain acquisition transactions can close, all parties must file a "Notification and Report Form" with the Federal Trade Commission and the Antitrust Division of the Department of Justice. Upon the filing, a 30-day waiting period then ensues during which time those regulatory agencies may request further information in order to help them assess whether the proposed transaction violates the antitrust laws of the United States.  The 30-day waiting period is frequently extended by regulators, especially in complicated mergers.