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Private equity giants accused of collusion during buyout boom

11 Oct 2012

Top executives at some of the world’s biggest private equity firms have been accused of collusion during some of the largest leveraged buyout deals in history, newly released court filings have shown.

More than ten private equity heavyweights including Blackstone, Carlyle Group and KKR have been sued by shareholders in 27 companies who claim they lost out on more than $1bn due to anti-competitive action during takeovers.

TPG Capital, Bain Capital and the private equity arm of Goldman Sachs were also named in the lawsuit, which covers deals made at the height of the buyout boom between 2003 and 2007.

Newly revealed emails between senior executives such as George Roberts – the ‘R’ in KKR – and Blackstone president Tony James show them plotting to gain maximum return on deals in a way that goes “way beyond professional courtesy,” the lawsuit alleges.

All the defendants deny the allegations and said they will defend the claims, adding the email exchanges were taken out of context, according to reports.

Among the emails was one sent by James to Roberts following Blackstone’s decision not to bid for hospital operator HCA, which was then picked up by KKR and Bain Capital.

In it James said, “We would much rather work with you guys than against you.

“Together we can be unstoppable but in opposition we can cost each other a lot of money.

“I hope to be in a position to call you with a large exclusive PTP [public to private] in the next week or 10 days.”

The lawsuit says Roberts replied simply with the word “agreed.”

Other deals cited by the 221-page lawsuit include the 2005 takeover of SunGard Data Systems by a consortium of firms comprising Bain Capital, Blackstone, Goldman Sachs Capital Partners, KKR, TPG, Providence Equity Partners and Silver Lake Partners.

TPG co-founder James Coulter sent an email which said being aggressive in the SunGard deal would make enemies “while perhaps benefiting no one but the (company’s) shareholders”, Reuters reported.

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

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