Dec. 24 (Bloomberg) -- United Rentals Inc. agreed to accept a $100 million breakup fee from Cerberus Capital Management LP, ending a six-week battle over whether Cerberus could call off a $4 billion acquisition of the largest U.S. equipment-rental company.

United Rentals rose 4.4 percent in New York trading after a 17 percent decline on Dec. 21, when a Delaware Chancery Court judge ruled that private-equity firm Cerberus had the right to break off the takeover. United Rentals said today it wouldn't appeal and Cerberus said it would pay the fee.

Cerberus agreed in July to pay $34.50 per share for United Rentals' stock and backed out in November after U.S. credit markets weakened, prompting a lawsuit. Judge William B. Chandler III ruled last week that United Rentals should have known Cerberus had a right to pull out if it paid the $100 million fee. Today's stock rise may reflect investor relief that United Rentals can put the distraction behind it, a law professor said.

``The decision out of Delaware was very clear,'' said Carl Tobias, a professor with the University of Richmond School of Law in Virginia. ``Why keep fighting that?"

Greenwich, Connecticut-based United Rentals rose 79 cents to $18.70 at 1:32 p.m. in New York Stock Exchange trading after earlier climbing to $19. The company's stock has declined 45 percent since the day before New York-based Cerberus pulled out of the deal. U.S. exchanges closed early today for the Christmas Eve holiday. The shares are at the same price as in late 2005.

``Cerberus has consistently said it would honor its obligations regarding the $100 million guarantee,'' Cerberus spokesman Timothy F. Price said in an interview. ``And that situation hasn't changed.''

Termination Fee

The termination fee is the remedy Cerberus bargained for in this deal, said Lawrence Hamermesh, a professor at Widener University Law School who specializes in Delaware corporate law.

``They basically agreed during the case they'd have to pay this fee,'' Hamermesh said. ``There shouldn't be any controversy about it at this point.''

United Rentals had argued in court papers that New York- based Cerberus's RAM Holdings unit was attempting to use the turmoil in U.S. credit markets from subprime mortgage concerns as a pretext to extract a lower price. Cerberus countered that the agreement provided specific language that allowed RAM to pull out of the deal after payment of the termination fee.

``URI knew or should have known what Cerberus' understanding of the merger agreement was,'' Chandler said in his ruling after a two-day trial that ended Dec. 19. Chandler said the agreement's language on the fee was confusing and evidence of the negotiation process was ``muddled.''

Tender Offers

United Rentals also will end a related bond-repurchase offer, the rental company said in a statement today. United Rentals spokesman Mark Semer declined comment when reached by telephone.

The debt tender offers, which expired at midnight New York time on Dec. 21, were dropped because completion of the merger was a condition of the offer.

Other buyouts have collapsed as credit investors balked at buying bonds and loans committed to fund the transactions. Kohlberg Kravis Roberts & Co. and Goldman Sachs Group Inc. in October abandoned their $8 billion purchase of Harman International Industries Inc. Investors led by J.C. Flowers & Co. walked away from their $25.3 billion deal to buy SLM Corp., the biggest U.S. education lender, after the Reston, Virginia- based company refused to consider a lower offer.

United Rentals leases forklifts and backhoes and other gear from about 700 locations in the U.S., Canada and Mexico. Its customers include utilities and builders in a $33 billion market. The company has about 11,500 employees and posted sales of $3.64 billion last year.

To contact the reporter on this story: Will Daley in Chicago at wdaley2@bloomberg.net

Last Updated: December 24, 2007 14:46 EST