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Monday, October 22, 2007

SLM: The Transcript of the Hearing Today

Here is the transcript of the SLM hearing today.  My favorite quote by VC Strine:

SLM Attorney:  we are still not terminating the agreement, and I think there is a cloud over this company by virtue of . . .

THE COURT: With having a potentially $900 million receivable, plus interest? I wish I had a cloud like that.

Basically, SLM's attorneys argued that the contract could be decided on its face without resort to parole evidence (i.e., on the plain language of the contract alone without having to look at the facts of the negotiation).  SLM consequently argued that VC Strine could decide the matter on a summary judgment motion without substantial discovery.  This is a risky strategy by SLM as I do think that their interpretation is a bit stretched (to say the least).  Strine wisely noted on this point that there were differing interpretations of the MAC language and in that case a judge almost always has to resort to parol evidence.  I suspect SLM is adopting this course because the parole evidence for their case is simply not that great.  And I suspect that it will not fly -- Flowers has already disclosed parol evidence justifying its case beyond the fact that the plain language of the merger agreement appears to favor them.   

Ultimately, Flowers et al. agreed to waive the no-shop and other portions of the merger agreement limiting SLM's ability to operate freely.  On this basis, Strine said he would hold a trial in January unless the parties agreed to limit discovery and set a more expedited schedule.  Don't expect Flowers to do so.  Time here is on their side as it permits more facts about SLM's position to come out and sober judgment to set in. 

Other tidbits:  CEO of SLM Lord attended the hearing; Wachtell had six attorneys present including famed litigator Bernie Nussbaum though only Marc Wolinsky from that firm spoke.  Expensive trip on Amtrak for Flowers, et al sending them to Delaware.  But, given the amount at stake, completely justified.      

http://lawprofessors.typepad.com/mergers/2007/10/slm-the-transcr.html

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The hearing Delaware Vice Chancellor Leo Strine held in the dispute over the Sallie Mae buyout had a number of interesting features. Fortunately, a transcript is available online. (HT: Lattman) Preventing a race from the courthouse. When counsel for... [Read More]

Tracked on Oct 23, 2007 4:39:56 PM

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