Some of the biggest names in private equity have been sued by investors claiming the firms allegedly conspired to fix prices in the firms’ bid to acquire companies. According to the lawsuit seeking class action status filed in U.S. District Court for the Southern District of New York, the members of the purported class – investors in companies that have gone private over the past several years – claim they were “paid less for equity shares sold to defendant and their co-conspirators than they would have paid in a competitive marketplace, unfettered by defendants and their co-conspirators’ collusive and unlawful price fixing.” The suit – which charges Merrill Lynch, Kohlberg Kravis Roberts, The Carlyle Group, Silver Lake Partners, The Blackstone Group, Thomas H. Lee Partners, Apollo Management and Warburg Pincus, among others – arises following news that the Department of Justice was looking into “club deals,” whereby p.e. firms team up to acquire public companies and take them private. The plaintiffs charge that the clubbers kept bidders from acquiring a company at a better price, and that the p.e. club members entered a pact whereby they would not make competing bids, would share information on their bids and even offered equity to non-club members who submitted failed bids. Most of the firms named in the suit declined to comment, but Carlyle spokesman Chris Ullman told Dow Jones Newswires, “This set a new low for frivolous lawsuits.”
