November 15, 2007 (LPAC)--Cerberus, the aggressive buyout firm named for the dog guarding hell in Greek mythology, has backed out of its $7 billion takeover deal of United Rentals, of Greenwich, Connecticut because of turmoil in credit markets. In backing out the day before the deal was to take effect, Cerberus is likely to be sued, and to lose its reputation as a reliable deal maker.

Cerberus agreed to buy United Rentals on June 22, and lined up the capital from Credit Suisse, according to letters made available to the Wall Street Journal. When Cerberus raised backing out of the deal because of turmoil in the credit markets, United Rentals replied that market turmoil was specifically excluded as a reason the deal could be canceled, and that there were no material adverse changes since the deal was signed. United Rentals' shares dropped 31% on Nov. 14 after the Cerberus cancellation was announced.

It is as if Greek mythology's revenge-seeking Furies have been chasing Cerberus ever since the firm led the way in destroying the U.S. auto industry. Cerberus took over General Motors Acceptance Corp.--GM's financial unit worth more than $200 billion-- on Nov. 1, 2006, buying 51% of its shares. Since then, its losses have totaled over $4 billion, all of which, and more besides, were losses of GMAC's residential mortgage unit, ResCap. Six months ago, the hell dog bought Chrysler Corp., only to have it lose money in both of the quarters since its takeover.

It is expected that United Rentals will not allow Cerberus to walk away by simply paying the $100 million breakup fee, but rather sue Cerberus in Federal Court in Delaware. The hell dog's prospects are not made any brighter by the losses reported by Blackstone and Fortress hedge funds, since they have gone public.