Judge rules for Cerberus in United Rentals merger lawsuit

Industrial Distribution staff -- Industrial Distribution, 1/7/2008 6:47:00 AM

A Delaware judge ruled that affiliates of Cerberus Capital Management do not have to consummate their $7 billion buyout of United Rentals.

Chancellor William Chandler III ruled that the construction equipment rental company’s executives should have known that the agreement, which included provisions for Cerberus to pay a $100 million termination fee if it backed out, would give the private equity giant’s executives the belief that they had the right to spike the deal as long as they paid the $100 million fee.

United Rentals had filed a lawsuit seeking to compel Cerberus to go through with the buyout after the equity firm backed out of the deal.

Following the ruling, Cerberus said it will pay the $100 million termination fee.

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