WASINGTON (Bloomberg) — Cerberus Capital Management, a private-equity firm seeking to cancel a $4 billion buyout of United Rentals, can withdraw its bid if it pays a fee under the acquisition agreement, a professor said.

John C. Coates IV, a Harvard University law professor hired by Cerberus to study the deal, said the acquisition agreement contains language that gives the investment firm the right to renege if it pays a $100 million "reverse termination fee." Coates's report was filed yesterday in Delaware Chancery Court in Wilmington as part of United Rentals' lawsuit over the deal's collapse. United Rentals is the largest US construction-equipment rental company.

"It is well understood in the market that the practical effect of a reverse-termination fee is to permit the buyer to walk away from the transaction upon payment of the fee," Coates, who teaches courses on law and economics, said in his 12-page report. Coates specializes in merger-and-acquisition law, according to the report.

United Rentals, based in Greenwich, Connecticut, sued Cerberus last month for refusing to complete the $34.50-a-share buyout because of worsening credit markets. Delaware Chancery Court Judge William B. Chandler III set a December 17 trial date on the dispute.

Mark Semer, a United Rentals spokesman, didn't immediately return calls to comment on Coates's report.

United Rentals contends in court papers that New York-based Cerberus's RAM Holdings unit is using the turmoil in US credit markets from subprime mortgage concerns as a pretext to extract a lower price in the buyout. United Rentals says the agreement doesn't provide any basis for Cerberus to cancel the buyout.

Cerberus executives counter that the agreement provides specific language that allows RAM Holdings to pull out of the deal if the $100 million fee is paid.

In his report, Coates said such provisions "are now very typical in large buyouts" to protect both sides in a deal.

"The valuable certainty provided by these innovations would not exist if every time a buyout sponsor sought to pay a reverse-termination fee instead of completing a buyout the target could pursue the remedy" of having a judge force the buyer to proceed, the professor said.

Coates, who said in the report that Cerberus agreed to pay him $950 an hour for his work in the case, is a former partner at New York's Wachtell, Lipton, Rosen & Katz. American Lawyer magazine said the law firm led the list of top counselors involved in US mergers and acquisitions in 2005. The firm advised clients on combinations valued at $265 billion that year, the magazine said.

United Rentals' lawyers have noted that other companies seeking to use similar provisions to rescind purchase agreements have faced difficulties under Delaware law.

A Delaware judge ruled in 2001 that Tyson Foods, the second-largest US poultry producer after Pilgrim's Pride, had to complete a $4.7 billion acquisition of rival IBP. Tyson executives had alleged that IBP officials concealed information about their company's finances.

Delaware Chancery Court Judge Leo Strine found IBP disclosed the problems prior to the sale and Tyson had no legal basis for pulling out of the deal. He noted that the food processor was motivated by "buyer's regret."

United Rentals, with about 11,500 employees, leases equipment including forklifts and backhoes from about 700 locations in the US, Canada and Mexico to builders, utilities and homeowners in a $33 billion market.