JP Morgan Chase to Purchase Collegiate Funding Services for $633 million

JPMorgan Chase Bank, N.A. has signed a definitive agreement to purchase Collegiate Funding Services, Inc., a leader in student loan servicing and consolidation, to create a comprehensive education finance business, the companies announced today.

Chase will pay $20 per share in cash, for total consideration of approximately $663 million, for Collegiate Funding Services.

In 2004, Chase Education Finance originated $7.9 billion and Collegiate Funding Services originated $4.4 billion in student loans, including Federal Family Education Loan Program and private loans. Collegiate Funding Services serviced approximately $12.1 billion in loans as of September 30, 2005.

“Collegiate Funding Services’ marketing, origination and servicing capabilities will complement our sales and marketing expertise,” said Brad L. Conner, executive vice president of Chase. “Together, we will be a major provider of every type of student loan as we help students and their parents achieve their educational goals. Both Chase and CFS schools should expect continued excellence from the combined business.”

Upon completion of the transaction, J. Barry Morrow, president and chief executive officer of Collegiate Funding Services, will become president of the combined Chase Education Finance business. He will report to Conner, who has responsibility for home equity and education lending at Chase.

“This combination is a great opportunity for CFS and our customers, employees and shareholders,” Morrow said. “We will be joining forces with a powerful brand and a recognized leader in financial services, and CFS employees will play a key role in the combined business.”

The combined business will be headquartered in Fredericksburg, Va., the current home of Collegiate Funding Services, and will maintain other sites, including Jackson, Miss.; Indianapolis, Tampa and Boston.

The companies expect the purchase, which is subject to CFS shareholder and regulatory approval, to close in the first quarter of 2006. The Lightyear Fund, L.P., which is the largest shareholder of CFS, has agreed to vote its shares in favor of the transaction.