April 30, 2008— -- After news broke this morning on the Blotter on ABCNews.com of the ongoing talks between the investment giant Cerberus and the controversial security firm Blackwater, the talks have now ceased, and there will be no deal.
Late today a spokesperson for Cerberus told ABCNews.com that they have decided not to pursue a transaction with Blackwater. The spokesperson declined to reveal the reasoning behind the decision.
Cerberus, which owns a controlling stake in Chrysler, had been in negotiations to buy the controversial security firm Blackwater USA, which has millions of dollars in U.S. government contracts in Iraq, according to sources familiar with the talks. Other sources said auditors from Cerberus had been examining Blackwater's books since the beginning of the year.
Blackwater did not immediately respond to a request for comment.
The reclusive founder of Cerberus, Stephen Feinberg, reportedly told his investors in a letter earlier this year that he hated all the attention the company was getting.
"We do our best to avoid the spotlight," wrote Feinberg, "but unfortunately, when you do some large deals, such as Chrysler and GMAC, it is hard to avoid."
Owning control of Blackwater would certainly have attracted even more attention to Cerberus. Blackwater has been accused of tax fraud, improper use of force, arms trafficking and overbilling connected to its work for the U.S. government in Iraq. A grand jury, federal prosecutors and congressional investigators are all currently probing allegations against the company.
Despite the controversy, however, Blackwater was recently renewed for a $1.2 billion private security contract with the State Department. The one-year extension is worth an estimated $240 million.