Bain Capital agreed to pay $54 million to settle a class action lawsuit alleging that the Boston firm and several other major private equity firms colluded to keep rivals from outbidding them on giant buyout deals.
Wall Street’s Goldman Sachs Group Inc. also agreed to a $67 million settlement in the case, which has been widely watched in private equity investment circles. Both Bain and Goldman denied “any wrongdoing or liability” for the allegations, according to a filing Wednesday in federal court in Boston.
The lawsuit was brought in 2007 by former stockholders in companies that Bain, Goldman and the other firms had acquired, alleging that they had been cheated of potentially higher profits in the buyouts. The plaintiffs include retirement systems for police and firefighters in the cities of Detroit and Omaha.
They alleged that the private equity firms violated federal antitrust laws by agreeing not to “jump” or outbid each other after acquisitions were announced of such companies as movie theater owner AMC Entertainment Inc., software maker SunGard Data Systems Inc. and casino owner Harrah’s Entertainment Inc. Often, these investment firms bid together, in groups, on such deals.
A Bain Capital spokesman, Ernesto Anguilla, called the case “meritless and baseless” in a statement. “The court never cited any evidence – no document, no witness, no meeting – tying our firm to any of the alleged claims,’’ he said. But Bain “ultimately determined that it was best for our investors and our firm to put this matter behind us in light of the costs and distraction of six years of litigation.”
Goldman spokeswoman Andrea Raphael said, “We are pleased to put this matter behind us.”
The other firms that have not settled are Blackstone Group, the Carlyle Group, KKR & Co., Silver Lake Partners and TPG Capital Management, according to court filings and news reports.
Boston-based Thomas H. Lee Partners was previously a defendant in the case, but won a dismissal last summer.