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By Michael Flaherty
NEW YORK, Oct 30 (Reuters) - Private equity firm Cerberus Capital Management LP [CBS.UL] withdrew its $6.1 billion bid for Affiliated Computer Services Inc , a person familiar with the matter said on Tuesday, ending a long and difficult effort to take the company private.
The failed deal is the latest casualty of the credit crunch, as private equity buyers and Wall Street lenders back out of agreements due to difficulties raising funds.
ACS' deal is unique to some of the recent broken deals in that the company's board seemed reluctant to the offer from the beginning. Any hope of getting a higher, competing bid was wiped out by the credit crunch.
Affiliated's Chairman Darwin Deason and Cerberus had made a $6.1 billion, or $62 per share, management-led buyout offer for the company in April. That offer came a month after the group offered $5.9 billion for the company.
But the deal dragged on, with ACS' board seeking more time to evaluate the offer and invite other bidders.
Management-led buyout offers often come under scrutiny because they involve insiders trying to buy the company at an affordable price.
By the summer, the subprime mortgage mess sparked a credit crunch, which spooked debt investors and caused investment banks to pull back on lending after getting stuck with hundreds of billions of loans on their balance sheets.
Several private equity deals fell apart by the fall, including takeout offers for audio equipment maker Harman International and technology firm Acxiom Corp.
The market had tagged the ACS deal as one destined to fail, with shares closing at $50.85 on the New York Stock Exchange on Tuesday, well below the $62 per share offer.
The company's stock dipped as low as $45 per share in early August.
"The market is now pricing in very little chance of a deal getting done at $62 and assuming that no deal is going to get done probably until October," Linda Varoli, an analyst at research firm Wall Street Access, said at the time.
At the time of the original offer for ACS, Cerberus and Deason said the chairman had agreed to work exclusively on behalf of the private equity firm in negotiations with the board.
The board responded by saying it would consider its strategic options, including soliciting other bids, and asked Deason and Cerberus to suspend that exclusivity arrangement.
New York-based Cerberus recently purchased auto makerand owns a large stake in GMAC, the financing unit of U.S. auto company .
(Additional reporting by Jim Finkle in Boston)