Private Equity Firms at Stake? - Analyst Blog
March 14 2013 - 1:47PM
Zacks
Recently, a Federal judge refused to dismiss an antitrust
lawsuit against some of the major private equity firms. The lawsuit
alleged that these firms had collaborated to bring down the prices
of mega-takeovers during the buyout boom, thereby duping
shareholders of billions of dollars.
At the same time, the judge also dismissed certain claims of the
lawsuit, providing some relief to the accused firms. Although the
judge mentioned that in some cases the buyers might have given
effort to lower prices, there was no evidence that could prove that
the transactions were actually rigged.
The plaintiffs had claimed that prices were reduced when the
private-equity firms formed groups to acquire companies. The firms
distributed the transactions among themselves and agreed not to
compete for the deals.
The lawsuit was filed in 2007 against 11 firms including private
equity giants, namely Bain Capital Partners LLC, The
Blackstone Group LP (BX), The Carlyle Group
LP (CG), GS Capital Partners – the private equity arm of
The Goldman Sachs Group, Inc. (GS),
Kohlberg Kravis Roberts & Co. (KKR) and TPG
Capital Management LP. The lawsuit alleged that these firms had
manipulated deals worth $250 billion over a period from 2003 to
2007.
The lawsuit encompasses 27 transactions including 2 deals, which
were never carried out, 19 leveraged buyouts, and 6 non-leveraged
buyouts. JPMorgan Chase & Co. (JPM), which
acted as a financial adviser to many of the above-mentioned deals,
was a defendant but the charges against it are now dropped.
For private equity firms, the continuation of this litigation would
result in millions of dollars in legal costs, adding to the
already-mounting expenses. However, with the removal of certain of
its claims, the lawsuit possibly opened doors for likely settlement
talks with the plaintiffs.
BLACKSTONE GRP (BX): Free Stock Analysis Report
CARLYLE GROUP (CG): Free Stock Analysis Report
GOLDMAN SACHS (GS): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis Report
KKR & CO LP (KKR): Free Stock Analysis Report
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