Blackstone, KKR, Bain Accused of Agreeing Not to Compete

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http://www.bloomberg.com/news/2012-10-10/investors-claim-kkr-told-equity-firms-not-to-bid-for-hca.html


According to the complaint, Blackstone President Tony James, seen here wrote in an e-mail to KKR co-founder George Roberts in reference to the Freescale Semiconductor Ltd. buyout,“We would much rather work with you guys than against you.”

Top executives at buyout firms including Blackstone Group LP (BX), KKR & Co. (KKR), Bain Capital Partners LLC and Carlyle Group (CG) LP assured each other in e-mails that they wouldn’t compete on deals to avoid driving up prices and angering competitors, according to a now public court complaint.

The correspondence was cited as evidence that the firms rigged bids in 19 leveraged buyouts and eight other transactions, including the biggest deals of the leveraged buyout boom, according to the amended complaint unsealed yesterday by a federal judge in Boston.

“We would much rather work with you guys than against you,” Blackstone President Tony James wrote in an e-mail to KKR co-founder George Roberts in reference to the Freescale Semiconductor Ltd. (FSL) buyout, according to the complaint. “Together we can be unstoppable but in opposition we can cost each other a lot of money.” According to the complaint, Roberts replied, “Agreed.”
The disclosures are a setback for the industry’s efforts to clean up its image, which has come under scrutiny as Bain Capital co-founder Mitt Romney seeks to become the next U.S. president. Individuals and pension funds that held shares in companies including Freescale, HCA Holdings Inc. (HCA), Neiman Marcus Group Inc., Clear Channel Communications Inc. and Aramark Holdings Corp. sued the private-equity firms and large investment banks including Goldman Sachs Group Inc. (GS) and JP Morgan Chase & Co (JPM) in 2007 and 2008.

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1. Lies and the Lying Liars Who Tell Them

So the frog gave the scorpion a lift . . .