United Rentals, Greenwich, Conn., announced today it has signed a definitive merger agreement to be acquired by affiliates of private investment firm Cerberus Capital Management, L.P. of New York, N.Y. The transaction is valued at approximately $6.6 billion, including $2.6 billion in debt.
Under the terms of the agreement, United Rentals stockholders will receive $34.50 in cash for each of their shares of United Rentals common stock. This is a 25 percent increase from the $27.55 closing share price on April 10, 2007, when United Rentals announced it would be exploring strategic alternatives.
According to Michael J. Kneeland, chief executive officer of United Rentals, the company will continue to focus on customer service and employee satisfaction. “Cerberus is a firm that shares our deep respect for operational excellence,” he adds. “They have an impressive track record of investing in industry leaders and working constructively with management teams to accelerate profitability and growth."
Completion of the transaction is subject to customary closing conditions, including approval of the transaction by United Rentals' stockholders and regulatory review. The board of directors has approved the merger agreement and has recommended the approval of the transaction by the company's stockholders. Stockholders will be asked to vote on the proposed transaction at a special meeting that will be held on a date to be determined. Holders of the company's preferred stock, including affiliates of Apollo Management, L.P., which makes up about 18 percent of the voting power, have agreed to vote their shares in favor of the merger.
Under the agreement, United Rentals may continue to solicit proposals for alternative transactions from third parties through August 31, 2007. There can be no assurances that this solicitation will result in an alternative transaction. United Rentals does not intend to disclose developments with respect to this solicitation process unless and until its board of directors has made a decision regarding any alternative proposals that may be made.
UBS Investment Bank acted as financial advisor to United Rentals in connection with the strategic review process and the transaction. Simpson Thacher & Bartlett LLP acted as legal advisor to United Rentals. Lowenstein Sandler PC, and Schulte, Roth & Zabel acted as legal advisor to Cerberus. Bank of America, Credit Suisse, Morgan Stanley and Lehman Brothers have committed to provide debt financing.