Private Equity Firms at Stake? - Analyst Blog

By
A A A

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

To read this article on Zacks.com click here.

Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: BX , CG , GS , JPM , KKR

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

Most Active by Volume

48,099,947
  • $16.09 ▲ 0.50%
40,277,806
  • $102.50 ▲ 0.24%
40,236,499
  • $19.57 ▲ 2.35%
31,092,510
  • $49.75 ▲ 0.65%
30,795,218
  • $34.92 ▲ 0.78%
29,910,855
  • $3.63 ▲ 0.83%
24,019,154
  • $13.06 ▼ 0.38%
23,753,906
  • $74.82 ▲ 1.31%
As of 8/29/2014, 04:04 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com