United Rentals Inc. agreed to accept a $100 million breakup fee from Cerberus Capital Management LP, ending a six-week battle over whether Cerberus could call off a $4 billion acquisition of the largest U.S. equipment-rental company.
United Rentals rose 4.4 percent in New York trading after a 17 percent decline Friday, when a Delaware Chancery Court judge ruled that private-equity firm Cerberus had the right to halt the takeover. United Rentals said Monday it wouldn’t appeal, and Cerberus said it would pay the fee.
Cerberus agreed in July to pay $34.50 per share for United Rentals’ stock but backed out in November after U.S. credit markets weakened, prompting a lawsuit. Judge William B. Chandler III ruled last week that United Rentals should have known Cerberus had a right to pull out if it paid the $100 million fee. Monday’s stock rise may reflect investor relief that United Rentals can put the distraction behind it, a law professor said.
“The decision out of Delaware was very clear,” said Carl Tobias, a professor with the University of Richmond School of Law in Virginia. “Why keep fighting that?”
Shares of Greenwich, Conn.- based United Rentals rose 79 cents to $18.70 after earlier climbing to $19. The company’s stock has declined 45 percent since the day before New York-based Cerberus pulled out of the deal.
U.S. exchanges closed early Monday for the Christmas Eve holiday. The shares are at the same price as in late 2005.
