Navient, the student loan servicing company, announced that it has rejected an offer from Canyon Capital Advisors and Platinum Equity Advisors. The company said the offer substantially undervalues the company and was not in the best interest of shareholders.
The offer of $12.50 per share valued Navient at $3.2 billion and represented a premium of only 6.6% over its closing price on Feb. of $11.73 per share, and a discount of 2.8% to the one-year volume-weighted average price of $12.86 per share, the company said. Navient said its board consulted with its financial and legal advisers and the determination was unanimous.
In a letter, Navient said it has had a constructive long-term relationship with Canyon and Platinum. It said the fund firms approached it last October seeking information that would allow them to make an offer, and they entered into a confidentiality agreement on October 19.
“After you had completed extensive due diligence, your advisor gave us an informal price range of $14 -$15 per share,” Navient said in the letter. “While our advisers informed you that they did not believe the range would be acceptable, we said we were prepared to provide additional due diligence on the basis that you would value the company above that range. Given this, we were surprised to see the low price in your expression of interest.”
According to Navient, on Feb. 15 the companies asked for more time for due diligence ahead of Navient’s annual shareholder meeting. Navient called that request unacceptable, “given that you have already had four months of very substantial due diligence and you have been fully aware of the deadline for shareholder proposals since it was set and publicly disclosed almost a year ago.”
In a statement Tuesday morning, Canyon said it was “surprised and frankly confused” by Navient’s public rejection, which was “hostile in tone” and issued while Navient chairman William Diefenderfer and Canyon chief executive Jack Remondi were in the middle of a telephone conversation.
Morgan Stanley is acting as financial adviser to Navient and Skadden is acting as legal adviser.