United Rentals stock up 6 percent on settlement hopes
PHILADELPHIA (Reuters) - Shares of United Rentals Inc (URI.N) on Monday rose about 6 percent after the company said it was holding talks in a bid to resolve its lawsuit to force Cerberus Capital Management LP CBS.UL to complete the planned $4 billion buyout of the equipment rental company.
Cerberus withdrew its $34.50-per-share takeover offer for United Rentals in November. United Rentals sued Cerberus in a bid to force the buyout firm to complete deal.
A trial between the two sides was scheduled to begin on Monday but was postponed by a day "to allow the parties to continue settlement discussions that were recently initiated," United Rentals said in a statement.
The statement gave hope to investors that the two sides could reach some kind of an agreement to save at least part of the deal, though what type of revised offer could emerge is not yet clear.
United Rentals said no settlement had been reached yet and there were no assurances that any settlement would be reached. The company also declined to comment on any potential settlement terms or the likelihood one will be reached.
Cerberus declined to comment.
United Rentals stock was up $1.30, or 5.5 percent, at $24.85 in early Monday trading after climbing to a session high of $25.25.
The trial is now scheduled to begin on Tuesday at 10:00 a.m. ET in front of Chancellor William Chandler III in the Delaware Court of Chancery in Georgetown, Delaware.
Cerberus and United Rentals are fighting over a clause in the merger agreement known as "specific performance." United Rentals has argued that the clause does not allow Cerberus to terminate the agreement and gives United Rentals the right to have the deal enforced.
After United Rentals sued Cerberus in Delaware, Cerberus filed suit in November against United Rentals in New York State Supreme Court, saying the buyout firm was liable only for a $100 million break-up fee and associated costs. Cerberus argued that United Rentals had no right to seek additional relief or to force the buyout firm to complete the deal.
The deal's collapse was one of several leveraged buyouts that have failed in recent weeks as buyers face difficulty getting funding amid weakening credit markets.
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