Judge Rules Against United Rentals in Cerberus Case

Dec. 28, 2007
A Delaware court ruled against United Rentals’ efforts to force Cerberus Capital Management to complete its $6.7 billion takeover of the company. Judge William Chandler ruled late Dec. 21 that the acquisition agreement allowed the acquirer to withdraw its offer in exchange for a $100 million buyout fee.

A Delaware court ruled against United Rentals’ efforts to force Cerberus Capital Management to complete its $6.7 billion takeover of the company. Judge William Chandler ruled late Dec. 21 that the acquisition agreement allowed the acquirer to withdraw its offer in exchange for a $100 million buyout fee.

United Rentals said Dec. 24 that it will ask Cerberus to pay the $100 million fee and will not appeal the ruling.

“In light of Chancellor Chandler’s Dec. 21 opinion, the United Rentals board of directors has determined that the company is best served by terminating the merger agreement and the constraints in imposes,” United said in a statement. “We remain committed to enhancing shareholder value, and believe the immediate need is to move forward and focus our energies on our business.” United Rentals said the $100 million fee is payable within two days of termination of the agreement.

Cerberus agree to acquire United Rentals for $34.50 per share in late July, but withdrew its offer Nov. 14, citing uncertainty in the credit and financing markets. The deal’s collapse is one of several leveraged buyouts that have failed in recent weeks as buyers have faced difficulty in obtaining funding.

United Rentals also said it was terminating previously announced debt tender offers being made by wholly owned subsidiary United Rentals (North America) Inc.