Student Loan Corp. (STU) has agreed to sell its assets to a trio
of buyers, including majority owner Citigroup Inc. (C), with
Discover Financial Services (DFS) acquiring the private
student-loan business for $600 million.
Meanwhile, SLM Corp. (SLM) -- commonly known as Sallie Mae --
will buy a $28 billion portfolio of securitized federal student
loans while Citibank buys $8.7 billion of assets.
Holders of Student Loan -- 80% owned by Citi, will be paid $30 a
share, a 42% premium to Thursday's closing price. The stock was
above $30 as recently as early May.
Citi said it will record a $500 million loss on the sale in the
third quarter.
The deal is set to close by year's end.
The divestiture comes as Citi has been shedding noncore assets
and occurs amid big changes in the student-loan sector. A ban
started July 1 that prevents private lenders from making federal
student loans.
The deal will see Sallie Mae's loan management and servicing
portfolio boosted 16% to $200 billion.
-By Matt Jarzemsky, Dow Jones Newswires; 212-416-2240;
matthew.jarzemsky@dowjones.com