The Wall Street Journal reports Cerberus Capital Management is near a $4 billion buy out deal for United Rentals Inc., the world's largest equipment rental company based on fleet size, according to people briefed on the matter late Sunday. Cerberus will reportedly pay $34.50/share, representing a 6.6% premium over United's Friday close of $32.37. The take out price is 25% higher than where United's shares traded when it announced it was pursuing a sale in April. The Journal comments that "barring last-minute snags, the acquisition will come as a confidence-booster for the LBO business," since there have been difficulties financing deals of late due to rising risk premiums. Cerberus will finance more than half the United deal using high-yield debt and asset backed securities, according to sources. United has 30 days to solicit superior bids, which could include rival bidders Platinum Equity of Beverly Hills and a consortium of Blackstone Group, Oak Hill Capital and Ripplewood Holdings. Update: United Rentals Inc. said on Monday it has accepted a $4 billion bid from Cerberus Capital Management LP.
Sources: Wall Street Journal, Reuters
Commentary: Borrowing Costs Rising in Chrysler, Other Buyout Deals • PowerShares Private Equity ETF As A Tell On PE's Top
Stocks/ETFs to watch: United Rentals Inc. (URI). Competitors: Hertz Global Holdings, Inc. (HTZ)
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