Credit crisis claims Cerberus, United Rentals deal

By Michael Flaherty

NEW YORK (Reuters) - United Rentals Inc said on Wednesday that Cerberus Capital Management is withdrawing its $4 billion takeover offer, the latest casualty of the credit crisis and a sign other leveraged buyouts nearing their close may face a similar fate.

Confirmation of the withdrawal helped push stocks lower near the end of the U.S. trading session.

"Cerberus is not prepared to proceed with the purchase of United Rentals on the terms set forth in its merger agreement," the equipment rental company said in a statement issued 17 minutes before the market close. Cerberus declined to comment.

Reuters had reported earlier on Wednesday, citing sources, close to the deal, that Cerberus was considering withdrawal, worried about United Rentals' economic outlook, and the troubles investment banks were having with selling an associated debt offering.

Shares of United Rentals closed down 31 percent to $23.50 after falling 27 percent following the earlier Reuters report.

New York-based Cerberus, a private equity firm and hedge fund had offered $34.50 per share for the company. A source close to the matter said that United Rentals' board is not renegotiating the price.

Cerberus' agreement to buy the company in July came right as the credit markets seized up from the subprime mortgage meltdown. That led to a string of leveraged buyouts falling apart, as buyers became concerned about companies' financial future and banks got stuck with buyout debt they couldn't offload from their balance sheets.

Cerberus is not citing a material adverse change (MAC) at United Rentals, according to the company. That means Cerberus will likely be the one responsible for paying the $100 million break up fee.