Thomas H Lee wins dismissal from LBO collusion lawsuit

Thu Aug 29, 2013 7:10pm EDT

* Firm's ties to alleged conspiracy not established

* Shareholders allege conspiracy not to "jump" others' deals

* Lawyer for shareholders says to pursue class certification

By Jonathan Stempel

Aug 29 (Reuters) - A U.S. lawsuit accusing private equity firms of conspiring not to outbid each other on companies they sought to buy now has one fewer defendant, after Thomas H. Lee Partners LP persuaded a federal judge on Thursday to dismiss the case against it.

U.S. District Judge Edward Harrington in Boston said he erred in ruling on July 18 that email evidence established TH Lee's ties to an alleged "overarching" conspiracy among private equity firms not to outbid, or "jump," each other after transactions were announced.

Harrington said he now believes the emails concerning the takeovers of casino operator Harrah's and food service company Aramark left open the possibility that TH Lee "acted independently" in making its decisions.

The decision eliminates one target for shareholders in formerly publicly traded companies who claim they received too little for their shares in buyouts between 2003 and 2007.

Eight buyouts totaling over $100 billion remain in the case, as do seven defendants: Bain Capital Partners LLC, Blackstone Group LP, Carlyle Group LP, Goldman Sachs Group Inc's private equity arm, KKR & Co, Silver Lake Partners and TPG Capital Management LP.

In the case of Harrah's, which was bought for $17.3 billion by TPG and Apollo Global Management LLC, one TH Lee executive told another "I knew we typically don't bust things up," prompting the other to lament "ambulance chasing" of buyouts by rivals.

Meanwhile, in the case of Aramark, which a group including TH Lee and Goldman bought, one Goldman executive suggested getting the word out that the buyout was a "done deal," which could create the implication that rivals knew to stand down.

But Harrington said that while the emails suggested a TH Lee link to an anti-jumping conspiracy, the first left open the possibility that the firm had "an independent fear of retaliation by TPG," and the second the possibility that it wanted to deter a last-minute competing bid.

Christopher Burke, a lawyer for the plaintiffs, said the dismissal of TH Lee "doesn't change the scope or magnitude of the case, and we're going forward with our briefing on class certification."

A TH Lee spokesman declined to comment.

In March, Harrington narrowed the six-year-old lawsuit to focus on the jumping claims, saying there was not enough evidence of a broader price-fixing conspiracy. Apollo was dismissed from the case in his July 18 ruling.

The case is Dahl et al v. Bain Capital Partners LLC et al, U.S. District Court, District of Massachusetts, No. 07-12388.