United Rentals says Cerberus backing out of merger deal

By Lisa Kerner

Charlotte, N.C., Nov. 14 - Cerberus Capital Management, LP is not prepared to move forward with its planned $7 billion purchase of United Rentals, Inc., United Rentals announced on Wednesday.

There has not been a material adverse change at United Rentals, according to a company news release.

Cerberus agreed on July 22 to acquire United Rentals for $34.50 cash per share. United Rental shareholders approved the merger deal at a special meeting on Oct. 19.

United Rentals is prepared to complete the transaction and considers the "repudiation by Cerberus as unwarranted and incompatible with the covenants of the merger agreement." The company cited its "strong third quarter results" and revised strategic plan as evidence United Rentals continues to perform well.

Cerberus's acquisition vehicle, RAM Holdings, Inc., is "interested in exploring a transaction" on revised terms, or is prepared to pay the $100 million parent termination fee, according to a schedule 8-K filing with the Securities and Exchange Commission.

In a Sept. 6 letter to Cerberus, L. Keith Wimbush said United Rental's board is "sorely disappointed" that the investment firm sought to renegotiate its deal "without cause or contractual support." Wimbush is overseeing completion of the transaction.

The letter was included as part of the SEC filing.

Cerberus has received binding commitment letters for financing the transaction through required bridge facilities, the news release stated.

United Rentals has retained the law firm of Orans, Elsen & Lupert LLP to represent it in connection with legal remedies in this matter.

United Rentals is a Greenwich, Conn., equipment rental company with a network of 690 rental locations in 48 states, 10 Canadian provinces and Mexico.

Cerberus is a private investment firm based in New York.

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