Filed under: Deals, Private equity

With the credit crunch and the cooling of private equity, the M&A space has been fairly meager lately. But this day, we got some good news (at least for deal junkies) — Ingersoll-Rand (NYSE: IR) has concurred to pay $10.1 billion for Trane (NYSE: TT).

Ingersoll-Rand, founded in 1871, is a major diversified industrial company, with brands like Club Car golf automobiles, Hussmann stationary refrigeration equipment, and Schlage locks. And with the Trane deal, the company will boost its large climate control business, making it the #2 player behind United Technologies.

Funny enough, it seems that Trane was trying to market itself to private equity buyers by selling off divisions and streamlining divisions. But of course, such a company can also be attractive to a strategic buyer - especially as global markets remain highly competitive.

With the Trane deal, Ingersoll-Rand will have $17 billion in revenues and $2 billion in EBIT (earnings before interest and taxes).

Yet, Wall Street is a bit skeptical, with Ingersoll-Rand’s stock price down 7%. Trane’s stock, on the other hand, is up 23%.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

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Filed under: Deals, Law, Private equity

Shareholders at United Rentals (NYSE: URI) have a right to be mad. Hedge fund Cerberus Capital Management offered to purchase the company. Shares rose from about $27 to over $34.

Then Cerberus walked. United Rental stock fell to $20.76 and has not recovered much. The entire matter headed to court. The legal battle was to begin this day in Delaware Chancery Court. That has been delayed while the two sides speak.

Cerberus stated that it was within its right to break off the contract. According to The Wall Street Journal, “the delay could help United’s flagging stock price, as well as clear up some of the negative public perception of Cerberus, a Wall Street buyout shop that provided little detail for why it walked away from its agreement.”

In other words, it may have been in the financial interests of Cerberus to walk out, but its may be a shaky legal ground.

Private equity firms have broken a number of these buyouts now, and, in some cases, contracts granted them to do so. The court system is apt to catch up to them at some point soon. If settlement speaks with United don’t work out, it might be in this case.

Just one announcement that an LBO shop has had to pay hundreds of millions in damages would send a real shudder through the industry.

Douglas A. McIntyre is an editor at 247wallst.com.

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