Navient Corp (NASDAQ:NAVI) shares were plummeting Thursday as the company announced it was acquiring a financial technology company.
The Wilmington, Del.-based company has reportedly agreed to terms with Earnest, based out of San Francisco, for a total value of $155 million. The move will help to digitize Navient, serving consumer-centric education credit products.
“Combining Earnest’s best-in-class data science, digital marketing, and technology with Navient’s industry and capital markets experience create an exciting platform to deliver value for consumers and investors,” said Jack Remondi, president and CEO, Navient.
The agreement is still awaiting regulatory approval, and the companies said they expect to iron out the deal during the fourth quarter of 2017. The deal will see the remaining share repurchase program of Navient suspended until the end of 2018.
However, Navient’s annual dividend of 64 cents will remain in place. The company’s capital will be invested toward growth of its education-lending business and building book value.
Earnest’s business specialized on financial technology and education finance, with its customers consisting of consumers who are unable to get finance from traditional banks. The company has been around since 2013, serving loans worth $1 billion in student loan refinancing loans in 2017.
NAVI stock slumped 13% Thursday. Although the deal is hurting Navient in the short term, it should be a good move moving forward as it will help expand the company’s selection of customers available.