Sallie Mae Goes Private for $25 B

Elena
16 Apr, 2007
New York City

Sallie Mae has been involved into regulatory investigations over relationships between colleges and student-loan companies. The deal is subject to approval by shareholders and clearances by regulators, is expected to close in late 2007. The investors would like to provide increased liquidity, stability and financial strength and J.P. Morgan Chase will support the company financially.

[R]8:15AM Sally Mae decided to go private for $25 billion.[/R]
Sallie Mae ((SLM)), student-loan firm, surged 16% after it agreed to sell itself to a group of two private-equity firms and two leading banks for $25 billion, or $60 a share. C. Flowers & Co. and Friedman Fleischer & Lowe LLC plan to take 50.2% ownership in the new firm, with J.P. Morgan and Bank of America each taking 24.9% stakes in the company. The investors would like to provide increased liquidity, stability and financial strength and J.P. Morgan Chase will support the company financially. Sallie Mae has been involved into regulatory investigations over relationships between colleges and student-loan companies. The deal is subject to approval by shareholders and clearances by regulators, is expected to close in late 2007. Sallie Mae will not pay further dividends before the deal closes. On completion of the deal, Sallie Mae''s current management will continue to lead the company, ensuring that it will continue to adhere to the New York Attorney General''s Student Loan Code of Conduct. Sallie Mae will continue to originate student loans under its internal brands.


[R]8:00AM NY-7:00PM Sensex surges over 300 points, Reliance hits all-time high.[/R]
The Sensex on BSE closed 311.50 points, or 2.33%, higher at 13,695.58. The market-breadth was strong with more than two advancers for each decliner. For 1,804 stock which advanced, 776 declined and 75 stock remained unchanged. Of the 30 stocks in the Sensex only two declined, while the rest advanced. The turnover on BSE was Rs 4054 crore compared to Rs 4,724 crore on Friday. The turnover on NSE was Rs 8,950.85 crore lower than Rs 9,735.35 crore on Friday.

Economic news

India and Azerbaijan have come to an agreement to cooperate in the oil and gas sector as Indian companies are set to play a greater role in the development of rapidly expanding oil and gas industry in the latter.

The government and steel companies may clash today since some steel companies are expected to hike prices which the government had warned them against. Steel Minister Ram Vilas Paswan stated that though the government will look into the justification for the price increases, it knows how to cope with any hike.

Earnings news

Indiabulls Financial Services Ltd. reported a 95% rise in its consolidated net profit to 1.57 billion rupees for the quarter ended March 31, fueled mainly by its consumer lending business. The total revenue for the full year to March 2007 was 12.44 billion rupees against 6.13 billion rupees a year ago, while net profit rose 75% to 4.43 billion rupees.

Trading highlights

ICRA was the most-active stock with a turnover of Rs 303.65 crore followed by Orbit Corp and Tata Steel.

Advancers

Cement stocks surged today as expectations of strong fourth-quarter earnings results based on higher prices, also aided the recovery. ACC soared over 5% to Rs 787. Grasim surged nearly 4% to Rs 2,375, and Gujarat Ambuja added over 3% to Rs 112. ACC unveils March 2007 quarter results on 19 April 2007, followed by Gujarat Ambuja Cements on April 20 2007.

Tata Steel rallied over 4% to Rs 533, ahead of its board meeting on April 17 2007, to consider the proposal for raising equity funds to finance its investment in a special purpose vehicle for the acquisition of Corus Group.

Reliance Industries advanced 3.5% to Rs 1460. hitting a high of Rs 1465, which is also an all-time high. Mukesh Ambani, said on Monday that Reliance Industries envisages robust demand for petrochemicals over the next 12-18 months.

Hindustan Lever gained 3% to Rs 214, on reports that the annual June-September monsoon rains were expected to be close to 100% of the long-term average this year. Oil exploration major ONGC surged 3.6% to Rs 903.75.

IT stocks continued their advance from Friday. Wipro gained 3% to Rs 587, Infosys rose 2% to Rs 2,128 and i-flex solutions advanced 4% to Rs 2,336. Infosys, on Friday gave a strong guidance for fiscal year 2008 in dollar terms. TCS rose 1.2% to Rs 1,279, ahead of its Q4 results due later today. BHEL and Bharti Airtel ended up 2.7% each to Rs 2,547 and Rs 802, respectively.

Decliners

There were only two decliners in the Sensex stocks. HDFC Bank slipped 0.8% to Rs 972 and Satyam lost 0.5% to Rs 479.

[R]7:00AM European markets gained on M&A activity including ABN Amro.[/R]
European markets advanced on Monday. National benchmarks advanced in all of the 17 western European markets that were open except Luxembourg. The U.K. FTSE 100 index rose 0.5% at 6,487.20, the German DAX Xetra 30 index added 0.7% at 7,252.88 and the French CAC-40 index advanced 0.6% at 5,822.51.

Advancers

ABN Amro rallied 5.5%. The bank, which started last month exclusive talks with Barclays, announced late April 13 that it received a letter from Royal Bank of Scotland, Santander Central Hispano and Fortis, asking for exploratory talks and saying they may offer to buy ABN Amro.

Royal Bank of Scotland advanced 3.5%, and ING, the biggest Dutch financial-services company, climbed 1.6%. Barclays shares rose 0.9%.

Philips gained 3.6 %, the highest since June 2002. First-quarter profit jumped to 875 million euros from 160 million euros a year earlier on a gain from the sale of a stake in Taiwan Semiconductor Manufacturing Co.

Miners also climbed. BHP Billiton Ltd., the biggest mining company, added 1.4%, while Rio Tinto Group, the third- largest, climbed 1.4%.

Swedish clothing retailer Hennes & Mauritz rose 2.8% after announcing that comparable sales rose 17% in March, lifted by warmer weather.

Decliners

Eiffage SA, third-biggest builder in France, lost 2.2%. The stock market regulator of the country, the Aurorite des Marches Financiers, has forced Eiffage to let worker shareholders dispose freely of their shares..

Oil and precious metals

Crude oil gained above $64 a barrel in New York on expectations of higher gasoline demand this summer in the U.S. Crude oil for May delivery rose 39 cents to $64.02 a barrel in after-hours electronic trading on the New York Mercantile Exchange in early trade in London. Brent crude for June settlement gained 37 cents to $69 a barrel in electronic trading on the ICE Futures exchange.

Gold surged to a nine-week high on speculation that rising commodity costs and a decline in the dollar will boost demand for the metal as a hedge against inflation. Silver also gained. Gold for immediate delivery gained $2.13, or 0.3%, to $687.65 an ounce in London. Platinum for immediate delivery rose $11.50, or 0.9%, to $1,282.50 an ounce after earlier climbing to $1,286.50, the highest since Nov. 21. Silver advanced 1.5 cents to $14.085 and palladium gained 50 cents to $377.50.

Currencies

The U.S. dollar was mostly lower against other major currencies in European trading Monday morning. The euro traded at $1.3561, up from 1.3539 late Friday in New York. The British pound traded at $1.9936, up from $1.9870. The dollar bought 119.33 Japanese yen, up from 119.12.