United Rentals sued Cerberus Capital yesterday for trying to walk away from a $7 billion (£3.4 billion) deal to buy the tool hire company.

Last week, it emerged that the private equity group was withdrawing and would not pay United Rentals an agreed $34.50-a-share offer.

Cerberus had sought to renegotiate the offer price amid anxieties about the state of global credit markets, which were rocked in the summer by the implosion of America’s sub-prime mortgage market.

United refused to change the terms of its merger and accept a lower price.

The private equity group insists that its only outstanding debt to the company is a $100 million break fee.

Yesterday, United said that it had filed a lawsuit in Delaware to force Cerberus to complete the deal.

In a statement, United said: “United Rentals believes that the repudiation . . . is nothing more than a naked ploy to extract a lower price at the expense of United Rentals’ shareholders. United Rentals believes that the financing sources stand ready to fulfil their contractual obligations.”

United also accuses Cerberus of seeking to buy the company for less by taking advantage of the large share-price drop that occurred after news that the private equity group intended to walk away from the merger leaked.

The case is the latest example of a leveraged-buyout falling victim to turbulence in the credit markets. For months, buyout specialists have been abandoning deals to buy companies.

It is thought Cerberus contacted United at the end of August to discuss the terms, citing concerns about “unanticipated developments in the credit and financial markets”. United insists such an excuse was excluded as an escape clause in the deal agreement.

Shares in United fell another 3 per cent yesterday to $22.75, having retreated from around $34 the day before it emerged that Cerberus planned to pull out.

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