Club deal lawsuit dismissed

An antitrust lawsuit alleging that KKR, Blackstone, Carlyle, Bain and nine other buyout groups fixed bids relating to club deals has been dismissed, though the plaintiffs are permitted to file a new suit with the same claim.

A lawsuit that accused some of the world’s biggest private equity firms of using club deals as a means to collude and keep buyout prices down has been dismissed without prejudice afer the plaintiffs dropped the suit.

The lawsuit, filed by three investors last November in Manhattan federal court, alleged that “investors in the target company are deprived of the full economic value of their holdings and `squeezed out’ at artificially low valuations”. It sought unspecified damages and class-action status with regard to dozens of buyouts.

The plaintiffs, L.A. Murphy, Marvin Sternhell and Henoch Kaiman, were shareholders of three companies that were the targets of multi-billion club deals: HCA, Univision and Harrah’s Entertainment.

Dismissal of the case does not prevent them from filing the same claims in a new lawsuit against the defendants, who were: Kohlberg Kravis Roberts; The Carlyle Group; The Blackstone Group; Clayton, Dubilier & RiceSilver Lake Partners; Bain Capital; Thomas H Lee Partners; TPG; Madison Dearborn Partners; Apollo Management; Providence Equity Partners; Merrill Lynch; and Warburg Pincus.

The US Department of Justice is currently investigating private equity club deals.