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SLM Shares Drop After Flowers Group Rejects New Plan

Sallie Mae, the biggest U.S. education lender, dropped the most in 14 years in New York trading after cutting its 2008 earnings forecast and saying J.C. Flowers & Co. refused to reopen acquisition negotiations.SLM Corp., as Sallie Mae is known formally, sank $2.99, or 9.4 percent, to $28.95 in composite trading at 10:31 a.m. after earlier falling 13 percent. That was the most since 17 percent on Feb. 18, 1993.

A group of buyers, led by J.C. Flowers & Co., Bank of America and JP Morgan Chase & Co., rejected a “new proposal to acquire the company with no preconditions,” Sallie Mae said today in a statement distributed by PR Newswire. The company said it would pursue “all available recourse,” including an existing lawsuit.

Sallie Mae sued the group after it rescinded its $60-a- share takeover offer. Flowers, based in New York, claimed that a law enacted in September cutting subsidies to lenders would materially hurt Sallie Mae’s profitability. Sallie Mae disputed the assertion and rejected a lower bid from the investors.

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