A New York-based investment fund last week sued Cerberus Capital Management for fraud in response to its failed buyout of United Rentals last year. In U.S. District Court in Manhattan, Amida Capital Management contends in a filed complaint that Cerberus “intentionally made deceptive and material misstatements regarding the positive effects of the merger.”
Amida’s complaint alleges Cerberus knew it did not intend to consummate the merger and made false statements and promises regarding the merger to potential investors. Amida said it bought about $3 million in United Rentals common stock in the months after Cerberus agreed to acquire United Rentals for $34.50 per share in July of last year. Amida then increased holdings by an additional $14.4 million after a November roadshow by Cerberus.
Cerberus then pulled out of the deal the week it was supposed to become final, causing United Rentals’ stock to plunge dramatically.