United Rentals Extends Debt Tender Offer

NEW YORK (AP) -- Shares of United Rentals Inc. lost a quarter of their value Wednesday amid concerns the company's $4 billion going-private deal with Cerberus Capital Management could fall through.

Earlier Wednesday, the Greenwich, Conn.-based company extended a debt tender offer after failing to secure enough buyers to cover all of the $2.04 billion it needs to help pay for the deal. The tender was scheduled to close Tuesday but was extended until midnight Friday.

United Rentals' shares plummeted in early trading, prompting the New York Stock Exchange to halt trading at 9:37 a.m. EST, exchange spokeswoman Mirtha Medina said.

"In view of the unusual market activity in the company's stock, the Exchange has contacted the company and requested that the company issue a public statement indicating whether there are any corporate developments which may explain the unusual activity," the NYSE said.

The exchange added that United Rentals said "its policy is not to comment on unusual market activity or rumors." Trading resumed at 9:44 a.m.

By mid-afternoon, the stock had lost $8.87, or 26.1 percent, to trade at $25.14. Earlier the shares traded as low as $24.05, not far off their 52-week low of $23.60.

Also helping drive shares lower was a report suggesting Cerberus was looking to change the terms of the deal or back out altogether.

Spokesmen for both United Rentals and Cerberus declined to comment on the matter when reached by The Associated Press.

"Why would Cerberus back out? In our view, today's news is likely the result of several issues," JPMorgan analyst Stephen Volkmann said in a note to investors. Among the concerns were that the offering price was high compared with similar deals, and that "some of Cerberus' assumptions behind the deal were aggressive," he said.

If the takeover falls through, Volkmann said he expects United Rentals shares to trade in the low $20 range.

"At this point, there is a possibility that Cerberus will renegotiate the deal, though it is difficult to speculate what that price would be," he said.

United Rentals said it has received tenders for about 99.9 percent of its 6.5 percent notes due 2012, about 98.6 percent for 7.75 percent notes due 2013, and about 99.1 percent of 7 percent notes due 2014. Those amounts are only slightly more than the company said it had lined up at the end of October.

United shareholders approved the buyout on Oct. 19.