01—Abstract
Summary
Summary of the 8-K filed July 24, 2007. Cited figures are marked; the original filing is the authoritative source.
United Rentals, Inc. (URI) has announced a definitive agreement to be acquired by affiliates of Cerberus Capital Management, L.P.
The transaction, structured as a merger, will see United Rentals become a privately held company with shareholders receiving $34.50a in cash per common share. This significant cash payout represents a premium over the prevailing market price and will also be applied to preferred stock and equity awards. The Merger Agreement includes a "go-shop" period until August 31, 2007, allowing United Rentals to solicit competing acquisition proposals.
The company can terminate the agreement under specific conditions related to superior proposals, with a termination fee structure in place that incentivizes the company to explore alternatives while also providing protection to the buyer. The transaction is subject to customary closing conditions, including stockholder approval and regulatory clearance.
02—Key points
Key Highlights
- United Rentals to be acquired by RAM Holdings, Inc. (an affiliate of Cerberus Capital Management) in a cash merger transaction.
- Each outstanding common share will be converted into $34.50 in cash, less any required withholding taxes.
- Preferred stockholders and holders of equity awards will also receive cash consideration based on the terms of the merger agreement.
- The Merger Agreement includes a "go-shop" provision, allowing United Rentals to seek alternative acquisition proposals until August 31, 2007.
- A termination fee of $100,000,000 is payable to Parent under certain circumstances, with a reduced fee of $40,000,000 if terminated for a superior proposal during the go-shop period.
- Key stockholders and the Chairman of the Board have entered into voting agreements to support the merger.
- The transaction is subject to customary closing conditions, including stockholder approval and regulatory approvals, and is not contingent on financing.
03—Questions
Frequently Asked Questions
What is the value of the acquisition for United Rentals shareholders?
United Rentals shareholders will receive $34.50 in cash per share for their common stock, with adjustments for preferred stock and equity awards as detailed in the Merger Agreement.
Is there a possibility of a higher offer for United Rentals?
Yes, the Merger Agreement includes a "go-shop" period until August 31, 2007, during which United Rentals is permitted to actively solicit and engage in discussions with potential alternative bidders.
What are the conditions for closing the acquisition?
The transaction is subject to several conditions, including the approval of the Merger Agreement by United Rentals stockholders, the absence of legal impediments, and the expiration of required waiting periods under antitrust laws. Notably, the closing is not subject to a financing condition.
Are there any penalties for United Rentals if they accept a superior offer?
If United Rentals terminates the Merger Agreement to accept a superior proposal identified during the "go-shop" period, a termination fee of $40,000,000 will be payable to Parent. Under other termination circumstances, the fee could be $100,000,000.
04—Continue