Buyout Firms’ $590 Million Collusion Settlement Approved

Goldman Sachs Group Inc., Kohlberg Kravis Roberts & Co. and Blackstone Group LP are among seven firms to win preliminary approval of a $590.5 million settlement with investors claiming they held down leveraged buyout prices.

The original complaint listed 19 leveraged buyouts and eight related transactions in which private-equity firms were accused of shortchanging shareholders in target companies of billions of dollars by colluding to suppress takeover bids.

U.S. District Judge William Young in Boston yesterday gave his OK to the accord, starting the last phase of antitrust litigation begun seven years ago. A final approval hearing is set for Feb. 11.

The firms were accused of holding down prices by forming groups to take the sought-after companies private, agreeing not to compete for some deals and allocating transactions among themselves.

Under a settlement disclosed this month, the world’s second-biggest private-equity firm, the Carlyle Group LP, agreed to pay $115 million and avoid a scheduled Nov. 3 trial, resolving the last open claims.

The settling parties, which also included Bain Capital Partners LLC, TPG Capital LP and Silver Lake Technology Management LLC, denied any wrongdoing or liability, according to Young’s order.

Dismissal Denied

At a December 2012 hearing, they contended that the plaintiffs had failed to provide evidence of an overarching conspiracy to rig bids. A defense motion for dismissal of the case was denied in March 2013.

The settlement class includes anyone who sold or exchanged stock as part of the leveraged buyout of businesses including the cinema operator AMC Entertainment Inc., the food-service business Aramark Corp. or the now-bankrupt Energy Future Holdings Corp., formerly known as TXU Corp.

Agreements by Blackstone, KKR and TPG Capital to pay a combined $325 million to resolve the suit were made public in an August federal court filing. Bain had earlier agreed to pay $54 million, Goldman $67 million and Silver Lake $29.5 million, leaving two Carlyle Group funds as the remaining defendants.

The total value of the accord to $590.5 million.

Leading the claimants were the Police and Fire Retirement System of the City of Detroit, individual Kirk Dahl and the executor of an estate.

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

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