* 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 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
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.