Cerberus backs out of United Rentals purchase

Cerberus Capital Management will not purchase United Rentals as previously agreed in a $4 billion cash deal, United Rentals officials said November 14. Cerberus, a private equity firm, had agreed in July to acquire the equipment rental company for $34.50 per share, including $2.6 billion in assumed debt.

According to United Rentals, no conditions exist that would allow Cerberus to back out of the takeover bid. Without a material adverse change, Cerberus would be required to pay a $100 million “breakup fee” if the purchase does not go through.

Speculation prior to the announcement sent United Rentals’ stock plummeting, with shares closing at $23.76 on Wednesday, a 30-percent drop.