Silver Lake to pay $29.5 mln in LBO collusion settlement – Reuters: Updated

(Reuters) – Silver Lake Partners LP agreed to pay $29.5 million to settle a lawsuit that accused it and several other large private equity firms of conspiring not to outbid each other on takeovers prior to the financial crisis, court records showed.

The settlement was disclosed in a filing late Thursday in federal court in Boston.

It came one month after Goldman Sachs Group Inc agreed to pay $67 million and Bain Capital Partners LLC agreed to pay $54 million to settle their portions of the litigation.

Blackstone Group LP, Carlyle Group LP, KKR & Co and TPG Capital Management LP remain defendants. They have said the case lacks merit. A trial is scheduled for Nov. 3.

The lawsuit was brought in December 2007 by shareholders of a group of companies that the private equity firms bought.

The firms were accused of conspiring to reduce competition by following “club rules,” often teaming up on buyouts and providing quid pro quos to influence each other’s behavior.

Twenty-seven buyouts were originally part of the case. In the eight that remain, the private equity firms are accused of collusion by having agreed not to “jump” each other’s bids after buyouts were announced.

The eight remaining buyouts are movie theater chain AMC Entertainment Inc, food service firm Aramark Corp, chipmaker Freescale Semiconductor Inc, casino operator Harrah’s Entertainment Inc, hospital chain HCA Inc, pipeline operator Kinder Morgan Inc, software maker SunGard Data Systems Inc and power company TXU Corp, now called Energy Future Holdings.

Silver Lake specializes in technology. It was accused of wrongdoing in connection with the $11 billion SunGard buyout, which it led, and Freescale, which was acquired by a Blackstone-led group.

“While we continue to believe that the plaintiffs’ claims about Silver Lake are baseless and without merit, we concluded that it was in the best interest of our limited partners to put this matter behind us, and end over six years of litigation, expense and distraction,” Silver Lake said in a statement.

The settlement “gets money back into shareholders’ pockets,” said Patrick Coughlin, a lawyer at Robbins Geller Rudman & Dowd representing the plaintiffs.

“We have four big defendants left, and so far there is no indication that any of them want to settle,” he added. “We feel our case is strongest against these four, and are confident.”

Representatives of Blackstone, Carlyle, KKR and TPG all declined to comment.

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

By Jonathan Stempel, Reuters

Note: This story was updated following the third paragraph.

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