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KKR, Blackstone, TPG Settle PE Collusion Lawsuit as Firms Move Past 2007

Stocks in this article: KKRBX

Updated from 10:44 a.m. ET to include Blackstone, TPG settlements and afternoon stock prices.

NEW YORK (TheStreet) -- KKR (KKR)Blackstone Group (BX), and TPG Capital have settled a class action lawsuit alleging that the company, along with over a dozen banks and private-equity firms, colluded on pre-crisis buyout deals. The buyout firms initially fought those allegations but they now settling for a total of $325 million without admitting or denying guilt.

In 2007, over a dozen banks and PE firms were sued by plaintiffs in a Massachusetts court of working to artificially keep buyout prices low by refusing to bid against each other.

The suit mostly involved so-called club buyout deals that were once the rage in the private-equity industry. In those deals, groups of PE firms and banks built buyout consortiums to bid on publicly traded companies with market capitalizations as large as $30 billion. While club deals have fallen out of favor since the financial crisis, the collusion lawsuit has loomed over the private-equity industry for years.

Read More: KKR Dividend Buoyed by KFN Deal, Asset Sales

Goldman Sachs (GS), Bain Capital and Silver Lake Partners earlier this year settled claims against them on the class-action lawsuit, with Goldman and Bain paying a combined $121 million to resolve claims without admitting or denying guilt.

Now, KKR, Blackstone and TPG are joining those PE peers after agreeing to a settlement that is scheduled to go in front of a judge in early September.

KKR disclosed Thursday's settlement in the firm's quarterly 10-Q filing with the Securities and Exchange Commission, however, the firm didn't specify what it will be paying. The company said it isn't expected to have a material effect on KKR's financial results.

"While we continue to believe that the plaintiffs' allegations are spurious, we determined that after 7 years it was best for KKR and our limited partners to put an end to the distraction and expense of this litigation," KKR said in a statement.

KKR, Blackstone and TPG had been scheduled to go to trial on the lawsuit in November, alongside other PE firms Carlyle Group (CG), which has yet to settle the lawsuit.

Blackstone and TPG's settlement, in addition to the aggregate $325 million settlement price, was disclosed in a Thursday court filing in Massachusetts.

KKR shares were falling over 1% in Thursday afternoon trading at $22.54, while Blackstone shares were little changed at $32.60.

Read More: KKR Rolls Up Specialty Finance Arm in $2.6 Billion Deal

-- Written by Antoine Gara in New York

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