Navient (NAVI) Rescinds Canyon & Platinum's Takeover Bid Offer

Considering its best interest and that of shareholders too, student-loan servicer — Navient Corporation (NASDAQ:NAVI) — has refrained from the takeover bid offered by hedge fund Canyon Capital Advisors LLC and private-equity firm Platinum Equity Advisors LLC. The bid worth $3.2 billion (2.47 billion pounds) undervalues the company, per Navient’s board.

Further, the board contemplates the offer to be a highly conditional unsolicited “expression of interest” from Canyon and Platinum. Therefore, Navient’s board, after discussions with financial and legal advisors, has abandoned the expression of interest.

Notably, the firms had offered $12.50 per share to acquire Navient, which represented a mere 6.6% premium over its Feb 15 closing price of $11.73 per share. Moreover, the offer was at a discount of 2.8% to the one-year volume-weighted Navient’s average price of $12.86 per share.

Additionally, the offer demanded additional due diligence and no details regarding as in how the firms — Canyon and Platinum — would consider Navient’s outstanding unsecured debt, warehouse financing facilities, and the ongoing litigation and regulatory matters.

Notably, Navient was approached in October 2018 and subsequently, a confidentiality agreement was signed with Canyon and Platinum, following which the student-loan servicer provided considerable due diligence access over the past four months. The confidentiality agreement ended on Feb 15, following which a non-binding expression of interest was rendered. Therefore, Navient rejected the offer as it undervalued the company.

Conclusion

Navient, which was once part of Sallie Mae (NASDAQ:SLM) , continues to be plagued with several litigation issues amid heightened regulatory scrutiny over alleged anti-consumer practices in the U.S. student loan industry. These are expected to hurt the company’s financials. Therefore, the company might consider better propositions in future which would reflect its fair value.

Shares of Navient have lost 14% compared with the 12.9% decline registered by the industry it belongs to.

Navient currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stocks to Consider

M&T Bank Corporation (NYSE:MTB) has been witnessing upward estimate revisions for the past 30 days. Further, the company’s shares have gained 2.4% in the past three months. At present, it carries a Zacks Rank of 2 (Buy).

Hamilton Lane Inc. (NASDAQ:HLNE) has been witnessing upward estimate revisions for the past 30 days. Additionally, the stock has jumped around 20.3% in the past three months. It currently carries a Zacks Rank #2.

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