Law Firm Files Class Action Lawsuit Against United Rentals

Law firm Abbey Spanier Rodd & Abrams, New York, N.Y., has filed a class action lawsuit on behalf of investors who purchased or acquired securities of United Rentals between Aug. 29, 2007, through and including Nov. 14, 2007.

On July 23, 2007, United Rentals entered into a definitive merger agreement under which affiliates of Cerberus Capital Management would acquire all of the outstanding shares of URI common stock for $34.50 per share. URI later filed its Schedule 14A Proxy Statement with the Securities and Exchange Commission in anticipation of the shareholder vote to approve the merger. Stockholders approved the merger Oct. 19. On Nov. 14, 2007, URI publicly announced that Cerberus had informed the company that it was not prepared to proceed with the purchase of URI on the terms set forth in the merger agreement.

On the news that Cerberus was backing out of the merger, the company posted its biggest drop since it went public in 1997 and plunged 31 percent, or $10.51, from $34.01 per share to a closing price of $23.50 per share.

The lawsuit alleges that the defendants violated the federal securities laws by failing to disclose that, several weeks after the merger agreement was signed, Cerberus contacted URI management and expressed its concern about its ability to proceed with the merger given the changes in the credit and financial markets, on which its financing for the deal depended. It was not until Nov. 14, 2007, when the company filed a Form 8-K that included letters, dated Aug. 31, 2007, and Sept. 6, 2007, which demonstrated that the merger had been at risk since Aug. 29, 2007, and that Cerberus sought to renegotiate the terms of the merger agreement.

The lawsuit alleges that the defendants' failure to disclose this information materially misled investors and caused the market for URI's shares to trade at prices artificially inflated by the belief that the merger would proceed. Had the August correspondence between Ceberus and URI been disclosed to the public in the Proxy, URI's shareholders would have been alerted to the risk of the transaction not going forward.

The plaintiff seeks to recover damages on behalf of all who purchased or otherwise acquired URI securities between Aug. 29 and Nov. 14.