By advising and financing United Rentals Inc.'s hostile bid for a competitor, Goldman, Sachs & Co. is fueling a debate over its mergers and acquisitions strategy.

For as long Goldman's rivals can remember, the firm has had a clear policy when it comes to advising bidders in hostile takeover attempts: Stay away. But some observers say the United Rentals mandate-coming on the eve of Goldman's planned initial public offering-suggests that the firm's strategy may be changing.

"They're a great competitor, but they've always acted as if they're above hostiles," said a banker at one Wall Street rival. "This makes me wonder if they're going to be out there in the future."

United Rentals of Greenwich, Conn., said Monday that it had hired Goldman to advise its $553 million unsolicited offer for Rental Service Corp. The firm is also looking to arrange $2 billion of loans to finance the bid and for general corporate purposes.

Goldman executives acknowledged that the firm has historically stayed away from hostile bidders, and they said that their approach has not changed but they will make an exception when a long-term client calls for help.

"We approach them cautiously and rarely," said a Goldman spokesman. "But we are a client-driven firm."

Goldman has advised United Rentals on two deals in the last year: Apollo Management LP's $300 million investment in the company in December 1998 and United's $1 billion buyout of U.S. Rentals Inc. in June.

Skeptics pointed to the $2 billion commitment to United Rentals as further proof that Goldman is changing its ways. The firm has been selective, if not stingy, when it comes to committing its balance sheet to syndicated loans. If the United Rentals loan goes to market, it would equal more than 20% of the $9 billion of loans Goldman syndicated in 1998.

The decision to advise a hostile bidder "is done on a case-by-case basis," a Goldman partner said. "You're not going to see more advising on unsolicited offers."

Many investment banks compete fiercely for the high fees and relationship building that come from advising and financing hostile bids. Competitors said that if Goldman aggressively enters the market it could prove formidable.

Goldman was the No. 1 mergers and acquisitions adviser in 1998. But it ranked No. 7 in advising unsolicited bidders.

Four companies that made hostile takeover bids in 1998 hired the firm, according to Securities Data Co.

Furthermore, Goldman usually has advised hostile bidders in Europe. Its only such U.S. deal last year was advising AMP Inc.'s bid for Allied Signal Inc.

Goldman "likes to say it's not aligned on the side of an unfriendly bidder," said Roy C. Smith, a limited partner at Goldman who now teaches finance at New York University's Leonard N. Stern School of Business. "Though it's not common, it certainly does happen from time to time."

But once its planned IPO is complete, Goldman partners will have less control over picking the firm's clients because they must share power with stockholders.

Asked whether that would lead the firm to a more aggressive approach to hostile bidders, Mr. Smith replied, "They're already there."

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