Blackstone, KKR Discussing Settlement in LBO Collusion Case

Blackstone Group LP (BX) and KKR & Co. (KKR), defendants in a lawsuit alleging a group of private-equity firms colluded to keep leveraged-buyout prices low, are in talks to settle with the plaintiffs, according to two people familiar with the matter.

Lawyers for the New York-based firms, which are among the biggest alternative-asset managers, are assessing whether they can reach settlement terms before the lawsuit is set to go to trial in Boston federal court in November, said the people, who requested anonymity because the case is ongoing. Blackstone and KKR may negotiate a joint settlement, the people said.

Peter Rose, a spokesman at Blackstone, and KKR spokeswoman Kristi Huller declined to comment. Dow Jones reported yesterday that the two firms are in talks to settle the case, citing unidentified sources.

A settlement by Blackstone and KKR would leave two remaining defendants, Carlyle Group LP (CG) and TPG Capital, in the seven-year-old case. A federal judge dismissed suits against defendants including Apollo Global Management LLC (APO) and Providence Equity Partners Inc. over the past two years. Silver Lake Management LLC, Goldman Sachs Group Inc.’s private-equity unit and Bain Capital Partners LLC settled in the range of $29.5 million to $67 million in the past two months.

Chris Ullman, a Carlyle spokesman, and Owen Blicksilver, a spokesman for TPG at Blicksilver Public Relations, declined to comment. David Mitchell, the lead lawyer for the plaintiffs in the case with Robbins Geller Rudman & Dowd LLP in San Diego, didn’t return a call for comment.

Leveraged Buyouts

The complaint had listed 19 leveraged buyouts and eight related transactions, in which the private-equity firms were alleged to have shortchanged shareholders in the target companies by agreeing to suppress takeover bids. Since the case was introduced in December 2007, the defendants have said the accusations are without merit.

Tony James, Blackstone’s president, said on a conference call yesterday that the case is “outrageous” and “malarkey.”

The plaintiffs included pension fund Police and Fire Retirement System of the City of Detroit and a Minnesota-based investor, Kirk Dahl.

The case is Dahl v. Bain Capital Partners LLC, 07-12388, U.S. District Court, District of Massachusetts (Boston).

To contact the reporter on this story: Devin Banerjee in New York at dbanerjee2@bloomberg.net

To contact the editors responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net Mary Romano

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