Spinoff Odds & Ends: Updating M&A situations at $NAVI and $GCI

Update on M&A

  1. Canyon Capital offered $12/share to acquire student loan processor Navient (NAVI), but the student loan servicing company’s management forcefully and publicly rejected the proposal. Basically, management felt the offer undervalued the company and want a bid more in the $14-15 range. Canyon was apparently surprised by the hostile tone since the offer represented a significant premium for shareholders and the fund subsequently revoked its indication of interest. NAVI shares then plummeed, but have since recovered a bit. The fund isn’t giving up though and will nominate a minority slate of board members in order to ‘bring a fresh perspective and oversight to Navient’s strategic direction’. Many believe this to just be an interlude to a final deal between the parties. We will see. For those that don’t remember, Navient was a 2014 spinoff from SLM Corporation (SLM) which is better known as Sallie Mae.
  2. We previously wrote about Digital First Media’s acquiring a minority stake in Gannett (GCI) and subsequently making a bid for the publisher at $12/share. DFM, which is backed by hedge fund Alden Global Capital and owns many major papers, was immediately assailed for its operating tactics. Articles poured out blasting the fund and many view DFM as destroying journalism. Senate Minority Leader Chuck Schumer even sent the company a letter demanding answers about its plans for the paper and questioning its management of employees, real estate assets and pension assets. Gannett rejected the bid as undervaluing the company, but DFM believes its premium offer is too good for shareholders to pass up. Gannett’s earnings woes continue and the company shows no sign of capitulating. DFM might ultimately win, but it’s definitely going to be a bloody fight.

Disclosure: Author holds no position in any stock mentioned.