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Providence, Apollo bid-rigging dismissed, eight other firms’ cases continue

19 Jul 2013

news_gavel_lrgA pair of private equity giants accused of colluding to ensure buyout bargains have managed to get the cases against them dismissed, although eight others firms are still being sued.

US District Judge Edward Harrington scrapped the case against Providence Equity Partners and Apollo Global Management, but rejected dismissals from Bain Capital, Blackstone, Carlyle, Goldman Sachs’ PE arm, KKR, Silver Lake Partners, Thomas H Lee Partners and TPG Capital Management.

Claims of an overarching conspiracy between the players – some of the world’s largest private equity firms – were rejected by Harrington in March, although individual claims of collusion were allowed to continue.

The firms were sued by shareholders in 27 companies who claim they lost out on more than $1bn due to anti-competitive action during takeovers made at the height of the buyout boom between 2003 and 2007.

Harrington said at the time, “The evidence of each specific transaction, including defendants’ communications with each other, for the most part, fails to connect to a ‘larger picture’ of an overarching conspiracy.

“While some groups of transactions and defendants can be connected by ‘quid pro quo’ arrangements, correspondence, or prior working relationships, there is little evidence in the record suggesting that any single interaction was the result of a larger scheme.”

Claims against JPMorgan Chase, which took on financing and advisory work in some of the deals, were previously dismissed by Harrington due to lack of evidence.

But he said investors were free to pursue claims of “jumping” in which firms agreed not to outbid each other once news of agreed deals was announced.

Among emails supplied as part of the case by investors was one purportedly sent by Blackstone president James to George Roberts – the ‘R’ in KKR – following Blackstone’s decision not to bid for HCA.

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 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 allegedly sent an email which said being aggressive in the SunGard deal would make enemies “while perhaps benefiting no one but the (company’s) shareholders”, the filing shows.

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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