* Blackstone, KKR, TPG to apportion settlement
* Carlyle remains a defendant
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By Greg Roumeliotis and Jonathan Stempel
Aug 7 Three of the world's largest buyout firms
have agreed to pay $325 million to settle a U.S. lawsuit
accusing them of colluding with rivals to keep prices down on
corporate takeovers prior to the financial crisis by agreeing
not to outbid each other.
The payment by Blackstone Group LP, KKR & Co LP
and TPG Capital LP will benefit shareholders of
some merger targets during a buyout boom that predated the 2008
financial crisis. The settlement was disclosed in a Thursday
Six defendants in the nearly seven-year-old lawsuit have now
agreed to pay a combined $475.5 million in various settlements,
without admitting wrongdoing.
U.S. District Judge William Young in Boston will consider
preliminary approval of the accords at a Sept. 4 hearing. Oral
arguments on class certification of the lawsuit are also
scheduled for the same date. The settlements will not be valid
if class certification is not granted.
Carlyle Group LP is the only remaining defendant
among 11 firms originally sued, and faces a Nov. 3 trial.
"These claims are without merit and we will continue to
vigorously contest the allegations," Carlyle said in a
In the December 2007 lawsuit, which relies heavily on email
evidence, private equity firms were accused of conspiring to
drive down takeover prices and reduce competition by following
"club rules," often teaming up on buyouts and providing quid pro
quos to influence each other's behavior.
The lawsuit now covers eight buyouts in which the firms
allegedly agreed not to "jump," or outbid, each other after
buyouts were announced.
"It's a pretty good settlement," said Patrick Coughlin, a
lawyer for the plaintiffs. "Antitrust cases like this are tough,
and there aren't many class-action settlements approaching $500
million like this one."
CARLYLE ON THE OFFENSIVE
In one case, soon after a KKR-led group agreed in July 2006
to buy hospital chain HCA Inc, a Blackstone executive
allegedly wrote that the $32.1 billion price "represents good
value and is a shame we let KKR get away with highway robbery."
And after a Blackstone-led group in September 2006 beat out
KKR to buy Freescale Semiconductor Inc for $17.5
billion, Blackstone President Hamilton "Tony" James emailed KKR
co-founder George Roberts that he would "much rather" work
together, and that "in opposition we can cost each other a lot
Twenty-seven buyouts were originally part of the case. A
federal judge in March 2013 threw out claims over alleged
collusion before buyouts were announced.
Other buyouts remaining in the case are movie theater chain
AMC Entertainment Inc, food service firm Aramark Corp
, casino operator Harrah's Entertainment Inc, pipeline
operator Kinder Morgan Inc, software maker SunGard Data
Systems Inc and power company TXU Corp, now called Energy Future
Blackstone, KKR and TPG will apportion the $325 million
payment among themselves. KKR said it settled to end the
distraction and cost of litigating. Blackstone declined to
comment. TPG was not immediately available to comment.
Last month, Silver Lake Partners LP settled with the
plaintiffs for $29.5 million. In June, Goldman Sachs Group Inc
and Bain Capital Partners LLC settled for a respective
$67 million and $54 million.
Carlyle had prior to Thursday signaled its plan to fight on.
In an Aug. 1 court filing, it said the "plaintiffs' entire case
fails" because they could not show that anyone, but for the
alleged collusion, would have jumped others' buyouts.
The case is Dahl et al v. Bain Capital Partners LLC et al,
U.S. District Court, District of Massachusetts, No. 07-12388.
(Reporting by Greg Roumeliotis and Jonathan Stempel in New
York; Editing by Tom Brown and Lisa Shumaker)