A Delaware judge ruled Friday that Cerberus Capital Management could not be forced to complete its $4 billion deal for United Rentals, a rental equipment operator.
After a two-day trial this week, William B. Chandler III of Delaware’s Court of Chancery said that the private equity firm need only pay a $100 million breakup fee, as stipulated in the deal agreement. United Rentals had argued that Cerberus could not unilaterally break off the deal.
“URI knew or should have known what Cerberus’ understanding of the merger agreement was,'’ Judge Chandler wrote in his ruling.
In a statement, Cerberus said:
We are gratified that Chancellor Chandler has ruled in favor of the Cerberus affiliates. The decision validates the Cerberus affiliates’ specifically negotiated ability to refrain from proceeding with the proposed transaction. The decision not to proceed was reached only after a great deal of deliberation and only after exploring all available alternatives. We regret the negative comments that were directed at us by URI, and are pleased that the court chose to decide the case on the merits and confirm that Cerberus acted in accordance with its rights and obligations.
Shares in United Rentals fell 17 percent Friday afternoon, closing at $17.91.
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