Buyout beat, week of Nov. 19, 2007

Cerberus pulls out of United Rentals deal

Cerberus Capital Management has backed out of its planned $4 billion purchase of United Rentals Inc., the rental equipment company said last week.

“United Rentals views this repudiation by Cerberus as unwarranted and incompatible with the covenants of the merger agreement,” the company said. United Rentals rents construction equipment, trucks, traffic control devices and other heavy-duty items.

The company said that the private equity firm did not cite a material adverse change, which typically is what’s required for a buyer to back out of a deal. The merger agreement included a $100 million breakup fee that Cerberus would have to pay the company if the deal failed to close, and United Rentals said it has hired a law firm as it considers possible legal remedies.

In the July 22 agreement, Cerberus, which earlier this year bought Chrysler Corp. for $7.4 billion, was to acquire Greenwich-based United Rentals for $34.50 per share in cash, United Rentals said. Including $2.6 billion of assumed debt, United Rentals valued the deal at about $7 billion.

Before the collapse of the deal was announced, JPMorgan analyst Stephen Volkmann said in a note to investors that Cerberus paid “near the high end of the comparable transaction range,” and companies in United Rental’s peer group have traded significantly lower.

Gala bids on Iberia

Iberia said last week that it has received a takeover approach from a group of investors led by Spanish private equity firm Gala Capital that values the flagship Spanish carrier at as much as $5.53 billion.

In a regulatory filing, Iberia said that it has received a letter from the group asking for access to the airline’s books. Madrid-based Iberia received a takeover approach in March from TPG. The firm’s preliminary offer was for about $5 billion. It has since built a consortium including key Iberia shareholder British Airways and several Spanish financial investors to prepare a binding offer for the company.

Another group of Spanish investors is also reportedly circling Iberia. Dow Jones, citing people familiar with the situation, said that this rival group is led by the former CEO of fashion retailer Inditex, Jose Maria Castellano. Castellano helped build Inditex into one of the world’s largest retailers by market capitalization.

3i buys Agent Provocateur

3i Group has agreed to acquire Agent Provocateur, a U.K.-based luxury lingerie retailer. No financial terms were disclosed.

Agent Provocateur was founded in 1994 and the company is known for its edgy, yet fun, image and has consistently been voted one of the top 10 cool brands in the United Kingdom. Today, Agent Provocateur products can be found across 14 countries, including the USA, Europe and the Middle East. In addition to lingerie, it has launched highly fragrances and has recently added shoes to its existing product ranges. The company also has a fast growing e-commerce business.

“We are delighted to be investing in such a unique and exciting brand as Agent Provocateur,” said Jennifer Dunstan of 3i. “The company has a fantastic reputation and is already well established throughout Europe. We believe there is enormous potential for the business to continue to grow and look forward to using both our retail experience and our global network to help Agent Provocateur achieve this ambition.” —Associated Press