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United Rentals files suit against Cerberus' acquisition vehicles in bid to close merger
By Lisa Kerner
Charlotte, N.C., Nov. 19 - United Rentals, Inc. filed a lawsuit against RAM Holdings, Inc. and RAM Acquisition Corp., formed by Cerberus Capital Management, LP to acquire United Rentals, to compel RAM to complete their agreed upon transaction.
The lawsuit, filed in the Delaware Court of Chancery, contends that RAM is "directly violating the merger agreement and acting in bad faith." In addition, United Rentals said RAM does not "have the right to pay a reverse break-up fee and simply walk away" especially since there is no financing barrier to completing the merger, a company news release stated.
United Rentals' lawsuit also claims that RAM wanted to take advantage of the company's stock price drop after news of RAM's intention to walk away from the deal became public.
As previously reported on Nov. 14, Cerberus said it was not prepared to move forward with its planned $7 billion purchase of United Rentals despite the fact there had not been a material adverse change at the company.
Cerberus agreed in July to acquire United Rentals for $34.50 cash per share. United Rentals shareholders approved the merger deal at a special meeting on Oct. 19.
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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