Discover Financial Services to Acquire $4.2 Billion of Private Student Loans & the Ongoing Bus. of The Student Loan Corporation
17 Settembre 2010 - 3:05PM
Business Wire
Discover Financial Services (NYSE:DFS):
- Transaction expected to
provide earnings accretion of approximately $.09 per share in
2011
- Acquisition expands
Discover’s market presence and origination capabilities in private
student loans
Discover Financial Services (NYSE:DFS) today announced that it
has reached an agreement to acquire The Student Loan Corporation
(“SLC”) for $600 million, or $30 per share. Separately and
immediately prior to the closing of Discover’s transaction, SLC
will sell $28 billion of assets to Sallie Mae and $9 billion of
assets to Citibank. Discover will acquire $4.2 billion of private
student loans and related assets at an 8.5% discount, along with
$3.4 billion of SLC’s existing asset-backed securitization debt
funding. The amount to be paid by Discover for the private student
loan assets is subject to a post-closing purchase price adjustment
between Discover and Citibank, which owns 80% of SLC’s outstanding
common stock.
“The private student loan business is an important part of
Discover’s direct banking strategy, and this acquisition will
enhance our competitive position in private student loan
originations,” said David Nelms, chairman and chief executive
officer of Discover. “The transaction is expected to be immediately
profitable for our shareholders.”
Nelms added, “The acquisition gives us a team with expertise in
all functional areas of student loans and an outstanding network of
relationships with colleges and universities that complements our
own.”
SLC has 52 years of experience in serving schools, students and
families nationwide. The company is a top-three originator of
private student loans and owns studentloan.com, an industry-leading
website.
The transaction is expected to close by the end of calendar year
2010 and does not require approval by Discover’s shareholders.
About Discover
Discover Financial Services (NYSE: DFS) is a direct banking and
payment services company with one of the most recognized brands in
U.S. financial services. Since its inception in 1986, the company
has become one of the largest card issuers in the United States.
The company operates the Discover card, America's cash rewards
pioneer, and offers personal and student loans, online savings
accounts, certificates of deposit and money market accounts through
its Discover Bank subsidiary. Its payment businesses consist of
Discover Network, with millions of merchant and cash access
locations; PULSE, one of the nation's leading ATM/debit networks;
and Diners Club International, a global payments network with
acceptance in more than 185 countries and territories. For more
information, visit www.discoverfinancial.com.
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. Such statements are based upon the current beliefs and
expectations of the company’s management and are subject to
significant risks and uncertainties. The following factors, among
others, could cause actual results to differ materially from those
set forth in the forward-looking statements: unexpected
difficulties or delays in executing the proposed transactions; the
company’s ability to successfully transition and integrate the new
business, including operations, technology, marketing; the
company’s ability to maintain relationships with schools, vendors
and parties related to the transaction; the company’s ability to
retain key employees; the company’s ability to execute on
expense-reduction initiatives related to the new business; the
impact of current, pending and future legislation, regulation and
regulatory and legal actions, including new laws and rules related
to student loans, financial regulatory reform and bankruptcy; the
actions and initiatives of current and potential competitors; and
the company’s ability to manage its credit risk. The
forward-looking statements speak only as of the date of this press
release, and there is no undertaking to update or revise them as
more information becomes available.
Additional factors that could cause the company’s results to
differ materially from those described in the forward-looking
statements can be found under “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” in the company's Annual Report on Form 10-K for the
year ended November 30, 2009 and Quarterly Report on Form 10-Q for
the quarter ended May 31, 2010, which are filed with the SEC and
available at the SEC's internet site (http://www.sec.gov).
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