On Friday, August 30th, a person familiar with the matter said that the Carlyle Group LP has agreed to pay $115 million to settle a lawsuit in which it was accused of conspiring with other buyout firms regarding a few takeovers that occurred before the financial crisis, to not to outbid each other.
Among those still pending trial, Carlyle was the only private equity firm that has not yet settled. This settlement will make the combined total $590.5 million that the buyout firms have agreed to pay to settle the leveraged buyout conspiracy charges.
Carlyle refused to admit any fault, just like its peers, as part of the settlement, according to a source who asked to remain anonymous until official announcements are made. Carlyle, based in Washington, D.C. and led by David Rubenstein, declined to comment.
Shareholders of the companies that were targets of private equity acquisitions during the leveraged buyout boom that occurred before the 2008 financial crisis.
In December 2007, accusation were made in a lawsuit against private equity firms claiming that they conspired to lower takeover prices and remove competition by using “club rules,” often working together on buyouts and making quid pro quos to affect each other’s actions.
Eight buyouts are including in the lawsuit; all of which allegedly collaborated to not “jump,” or outbid, each other once a buyout was announced.
Carlyle was one of 11 originally sued private equity firms.. Earlier this month in a court filing, Blackstone Group LP, KKR & Co LP and TPG Capital LP revealed that they would pay $325 million to settle the lawsuit.
Silver Lake Partners LP settled last month for $29.5 million with the plaintiffs. Goldman Sachs Group Inc and Bain Capital Partners LLC settled in June, respectively for $67 million and $54 million.
At a hearing on September 4th in Boston, U.S. District Judge William Young will evaluate preliminary approval of the accords. On the same date, the challenge made by Carlyle to the class action status of the lawsuit is scheduled to be heard.
Bids to be removed as defendants in the case were won by Apollo Global Management LLC, Providence Equity Partners Inc, JPMorgan Chase & Co and Thomas H. Lee Partners LP.
In one case in July 2006, right after a KKR-led group agreed to purchase the hospital chain HCA Inc, a Blackstone executive allegedly wrote that the $32.1 billion price “represents good value and is a shame we let KKR get away with highway robbery.”
In another case in September 2006, after a Blackstone-led group beat out KKR to buy Freescale Semiconductor Ltd for $17.5 billion, Blackstone President Hamilton James emailed KKR co-founder George Roberts that he would “much rather” work together, and that “in opposition we can cost each other a lot of money.”