URI [Archive]

**lzhang** Thu Nov 15, 2007 6:02 pm

URI
Anybody has any comments on URI deal?

Looks interesting.

**goog** Thu Nov 15, 2007 7:08 pm

We saw a number of companies that failed the merge dropped to much much lower than the price before the merger announced. Unless you are ready for holding long term, the arbitrage risk is huge.

**lzhang** Fri Nov 16, 2007 1:36 am

Then down 35% on the news? That is too much. Treat URI as a company going bankruptcy? The worst case is a lower price offer for the deal. Even LEND can go through.

Cerberus has loaded too much junks with it so it itself might be in trouble. And now it tried to play dirty.

goog wrote: We saw a number of companies that failed the merge dropped to much much lower than the price before the merger announced. Unless you are ready for holding long term, the arbitrage risk is huge.

**lzhang** Fri Nov 16, 2007 2:10 am

Well, in this URI mess, URI management has some responsibility. At least, from late August, they knew that Cerberus tended to renegotiate the deal, but they failed to take actions...

http://www.sec.gov/Archives/edgar/data/1067701/000101905607001167/0001019056-07-001167-index.htm

**goog** Fri Nov 16, 2007 9:18 pm

That is really common in current environment. Here are some other examples: ACXM is trading around $12-13 now. Before the acquisition news for $27.2, it was trading around $23. PHH is trading for around 21 now, before the acquisition news for $31.5 it was trading for around 28.

lzhang wrote: Then down 35% on the news? That is too much. Treat URI as a company going bankruptcy? The worst case is a lower price offer for the deal. Even LEND can go through.

Cerberus has loaded too much junks with it so it itself might be in trouble. And now it tried to play dirty.

goog wrote: We saw a number of companies that failed the merge dropped to much much lower than the price before the merger announced. Unless you are ready for holding long term, the arbitrage risk is huge.

**lzhang** Fri Nov 16, 2007 9:33 pm

But URI is very undervalued right now...

goog wrote: That is really common in current environment. Here are some other examples: ACXM is trading around $12-13 now. Before the acquisition news for $27.2, it was trading around $23. PHH is trading for around 21 now, before the acquisition news for $31.5 it was trading for around 28.

lzhang wrote: Then down 35% on the news? That is too much. Treat URI as a company going bankruptcy? The worst case is a lower price offer for the deal. Even LEND can go through.

Cerberus has loaded too much junks with it so it itself might be in trouble. And now it tried to play dirty.

goog wrote: We saw a number of companies that failed the merge dropped to much much lower than the price before the merger announced. Unless you are ready for holding long term, the arbitrage risk is huge.

**goog** Tue Dec 18, 2007 6:06 pm

I like the action URI management taken to get the deal done. The management in ACXM and MYE etc were just stupid.

If URI wins the law suit, it will lift lots of stocks in the process of merge.

**blast_investor** Thu Dec 20, 2007 3:53 pm

goog wrote: So do you believe URI has a big chance to win in the court?

Hi goog,

I have not studied the contract to know in and out of URI deal.

Currently, URI insist that buyer can not walk away by paying a fee, the buyer insist that contract allows that.

It is really going to up to the contract interpretation. How the court rules on this issue is likely based on the contract.

**blast_investor** Sun Dec 23, 2007 10:50 pm

United Rentals Loses Bid to Make Suitor Complete Buyout
http://www.nytimes.com/2007/12/22/business/22united.html?_r=1&ref=business&oref=slogin

"In a victory for Cerberus Capital Management, a Delaware judge on Friday ruled against the United Rentals petition to force the private equity firm to complete its $4 billion buyout.

After a two-day trial this week, William B. Chandler III of Delaware’s Court of Chancery said Cerberus could abandon the purchase by paying a $100 million breakup fee to United Rentals, as stipulated by the deal agreement. United Rentals, a rental equipment operator, had argued that Cerberus could not break off the transaction unilaterally.
"

"United Rentals had argued that Cerberus could not abandon the deal without invoking what is known as a material adverse affect clause, a legal escape hatch that is usually written into deal agreements. Legal observers said that the contract was so ambiguous that Judge Chandler could have ruled either way.
"

**blast_investor** Sun Dec 23, 2007 10:54 pm

Based on New York times article, it seems that URI buyout contract wording was not very clear so that buyer and seller sides both have different understanding on the dispute.

The court sided with buyer side, allowing buyer to walk away. Court basically says that the merger contract allows walking away by paying a fee.