This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Sallie Buyers Fire Back

The Flowers team has hired law firms Wachtell Lipton Rosen & Katz and Sullivan & Cromwell to represent it in the leveraged-buyout lawsuit. The group has 20 days from receiving Sallie Mae's lawsuit to respond to it, which could include filing its own countersuit, according to observers.

J.C. Flowers officials declined to comment, as did representatives of Sallie Mae.

An official following the private equity group's position cited a blog written by Wayne State University's Assistant Professor of Law Steven Davidoff. He believes that the private equity group may have a case to claim a material adverse change, after President Bush recently signed a bill trimming government funding for student lenders.

The clause, he writes, "only requires that the proposal be adverse in any respect. And SLM has already admitted that it estimates the bill is more adverse to core earnings over a five year period by 1.8%-2.1%," Davidoff writes. "A Delaware court will utilize the normal interpretation rules for contracts when interpreting this provision," he adds.

In a phone conversation, Davidoff says, "I think Flowers has a good case."

Speaking about the language of the merger agreement, he says, "It says it just has to be adverse. If they wanted to say materially adverse, they should have said that. They didn't," he comments.

"It's clear that the parties heavily negotiated the provision," he adds.

2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
BAC $15.64 0.00%
JPM $62.60 0.00%
SLM $10.25 0.00%
AAPL $130.28 0.00%
FB $81.53 0.00%

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs