Sallie Mae Drops $900M Lawsuit

Beleaguered student loan provider Sallie Mae yesterday dropped its $900 million lawsuit against the onetime suitors who bailed on a $25.3 billion buyout after the credit crunch caused would-be investors to walk away, reports the Washington Post. By agreeing not to seek the penalty from investment firm JC Flowers and several partners, Sallie Mae secured $31 billion in financing.

In April, Flowers, Bank of America and JP Morgan negotiated to buy Sallie Mae for $60 a share, a premium of nearly 50%. The summer’s subprime crisis prompted the buyers to renege, sending Sallie Mae’s shares into freefall and setting off a bitter personal battle between Sallie Mae CEO Albert Lord and billionaire investor Christopher Flowers. (More Sallie Mae stories.)