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Cerberus affiliate denies United Rentals' claim that it violated merger agreement
By Lisa Kerner
Charlotte, N.C., Nov. 20 - United Rentals, Inc. has been "less than forthright in its legal filings and its communications concerning those filings," according to a statement released by RAM Holdings, Inc. and RAM Acquisition Corp., affiliates of Cerberus Capital Management, LP.
RAM issued the statement in response to a lawsuit filed by United Rentals seeking to force RAM to complete its planned acquisition of United Rentals for $34.50 cash per share. United Rental shareholders approved the merger deal at a special meeting on Oct. 19.
On Nov. 14, Cerberus announced 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.
On Monday, RAM said the ability to walk away from the transaction with limited exposure was "specifically bargained for" and is clearly stated in the July 22 merger agreement. In addition, during negotiations "the deterioration of the financial markets was known to all parties." Under the agreement, the liability of RAM and the other Cerberus-related participants is limited to $100 million.
As previously reported, United Rentals' lawsuit, filed in the Delaware Court of Chancery, contends that RAM is "directly violating the merger agreement and acting in bad faith." 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.
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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