Bain, Goldman Sachs Agree To Pay $121M In Collusion Row

Bain Capital Partners LLC and Goldman Sachs Group Inc. have agreed to pay a total of $121 million to settle a proposed shareholder class action accusing them of conspiring to hold down prices of companies they bought out, according to documents filed in Massachusetts federal court Wednesday.

After six years of litigation, Bain Capital and Goldman Sachs have agreed to pay $54 million and $67 million, respectively, in cash to the settlement class members and cooperate with the plaintiffs in the prosecution of their claims against the private equity companies who didn’t settle. The nonsettling defendants include The Blackstone Group LP, The Carlyle Group LLC, Kohlberg Kravis Roberts & Co. LP, Silver Lake Technology Management LLC and TPG Capital LP, according to court documents.

The plaintiffs in the antitrust suit said the deals provide an “extremely favorable result” for the settlement class and are well within the ranges of fairness, adequacy and reasonableness.

“As this litigation is at an advanced stage, the parties have conducted their own significant investigation and evaluation of the relevant laws and facts necessary to assess the strengths and weaknesses of named plaintiffs’ claims and the settling defendants’ defenses,” attorneys for the plaintiffs wrote in a memorandum in support of their motion for preliminary approval of the settlements. “Based on these investigations, the parties have independently concluded that entering into the proposed settlements is in their best interests.”

The settlements announced Wednesday, if approved by the court, would mean Bain Capital and Goldman Sachs could escape the long-running suit accusing them and other firms of artificially depressing prices in leveraged buyouts ahead of a November trial date.

Christopher M. Burke of Scott + Scott LLP, counsel to the plaintiffs, hailed their progress but said there is more work to be done.

“This is a partial settlement and we are happy to be making progress for the plaintiffs and the class. But much work remains against the remaining defendants, Blackstone, Carlyle, KKR, Silver Lake and TPG,” Burke told Law360 late Wednesday. “If all goes according to Hoyle, we can look forward to a trial later this year and the final resolution of this matter.”

The proposed settlements are the most recent development in the ongoing action, coming after Bain Capital, KKR & Co. LP and other private equity firms urged the court not to certify the class in January. The private equity firms lambasted the bid by plaintiffs — former shareholders in the targeted companies who claim they received less than competitive payouts for their stock — for class certification, arguing that the would-be class members had little in common.

Stockholders first lodged the suit back in 2007 alleging that the private equity firms held back from competing against one another once a deal to buy some company had been announced, according to the suit. The transactions referenced in the suit were all "club deals," in which one or more consortia of private equity buyers would complete an acquisition.

Bain Capital said they deny any wrongdoing in the case.

“The court never cited any evidence — no document, no witness, no meeting — tying our firm to any of the alleged claims,” Bain Capital spokesman Ernesto Anguilla told Law360 on Wednesday. “We continue to believe the case is meritless and baseless, but 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.”

Representatives for Goldman Sachs didn’t immediately return requests for comment late Wednesday night.

The plaintiffs are represented by David W. Mitchell, Patrick J. Coughlin, Randi D. Bandman, Susan G. Taylor and Phong L. Tran of Robbins Geller Rudman & Dowd LLP; David R. Scott, Christopher M. Burke, Walter W. Noss and Kristen M. Anderson of Scott + Scott LLP; and Lisa A. Furnald, K. Craig Wildfang, Thomas J. Undlin and Stacey P. Slaughter of Robins Kaplan Miller & Ciresi LLP.

Bain Capital is represented by John D. Hanify and Michael T. Marcucci of Jones Day and by Craig S. Primis PC, David R. Dempsey, James H. Mutchnik and Jennifer W. Cowen of Kirkland & Ellis LLP.

Goldman Sachs is represented by John D. Donovan Jr. of Ropes & Gray LLP and Richard C. Pepperman II and Benjamin R. Walker of Sullivan & Cromwell LLP.

The case is Kirk Dahl et al. v. Bain Capital Partners LLC et al., case number 1:07-cv-12388, in the United States District Court for the District of Massachusetts.

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