Business

PE firms may pay more than $1B in collusion case

It’s going to cost the world’s largest private-equity firms — including KKR and Blackstone — more than $1 billion to settle the bombshell collusion case slowly winding its way through a Boston federal court, The Post has learned.

While no deal has been offered, shareholders in eight companies have indicated any future settlement would have to be north of $1 billion, a source close to the situation said.

“I think there was a time the plaintiffs would have settled for $1 billion, but that time has passed,” a source said. The value of the eight buyouts is $170 billion.

Defendants are not ready to settle, sources said.

The shareholders in 2007 sued KKR, Bain Capital, Silver Lake Partners, Blackstone Group, Carlyle Group, TPG Capital and Goldman Sachs Capital Partners and accused them of defrauding shareholders out of billions of dollars by colluding to keep prices artificially low when buying their companies.

The firms agreed from 2004 through 2008 not to jump each other’s signed deals, it is alleged.

Settlement talks could begin in earnest in coming months after a Nov. 3, 2014, trial date was set during a court hearing last week, two sources close to the situation said.

The PE firms have tried 10 times since the 2007 case was filed to get it tossed. Each effort failed.

Judge William Young, at a court hearing last week, said the court could offer the parties “alternative dispute resolution” by providing a mediator. The parties told the judge, several sources said, they already had a private mediator and had spoken several times.

Neither side is satisfied with the numbers being bandied about, the source added.

In March, the plaintiffs are expected to seek class-action status. Last month, Judge Young certified a class of Nexium drug buyers in a case brought by some of the same lawyers against AstraZeneca for blocking a generic version of a heartburn drug.

The private-equity firms have joint responsibility in the suit, so if any of the defendants settled on their own it could put whatever firm or firms remained at great risk for financial loss.

Much of the plaintiffs’ case rests on emails between top executives at the giant firms.

This includes Blackstone’s Tony James writing to KKR’s George Roberts after one deal: “Together we can be unstoppable but in opposition we can cost each other a lot of money.”

“Agreed,” Roberts answered, court papers said.

The PE firms say there is no evidence of a master plan.