United Rentals Sues Cerberus

GREENWICH, Conn. (AP) – United Rentals Inc. said Monday it filed a lawsuit trying to force Cerberus Capital Management LP to complete its previously agreed acquisition of the equipment rental company.

United Rentals filed a suit against RAM Holdings Inc. and RAM Acquisition Corp., the subsidiaries of private equity firm Cerberus that had agreed to buy United Rentals.

Earlier this month Cerberus backed out of its $4 billion purchase of United Rentals. The deal was valued at nearly $7 billion, including the assumption of debt.

United Rentals said Cerberus did not cite a material adverse change, which is required for canceling the sale. The acquisition has a breakup fee of $100 million.

United Rentals said in a news release that Cerberus said in a meeting that it “did not want to force its financing sources to fulfill their commitments, even though the merger agreement requires them to do so.”

Cerberus is directly violating the merger agreement and acting in bad faith to try and lower the price for the acquisition, United Rentals said.

Cerberus did not immediately return calls seeking comment.

Shares of United Rentals fell 48 cents to $22.88 in morning trading.