UPDATE: Hedge Fund Ends Talks To Purchase Blackwater

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ABC News reported late Wednesday that hedge fund giant Cerberus Capital Management has ended talks to purchase controversial security firm Blackwater USA:

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.

Keep reading.

Earlier Wednesday ABC News reported that a deal was in the works:

The hedge fund giant that owns a controlling stake in Chrysler is 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.

Cerberus Capital Management could invest $200 million for a stake in Blackwater, said a source close to the negotiations. Other sources said auditors from Cerberus had been examining Blackwater's books since the beginning of the year.

A source close to the negotiations says there is no deal yet, but there might be one in the future and that negotiations about a possible investment into Blackwater are ongoing.