Bain Capital, Bid-Rigging Lawsuit & TN’s Frist Family

An alleged bid-rigging conspiracy among Bain Capital and other private equity firms to divvy up targeted companies — including Nashville-based HCA — may have taken as much as $1.6 billion out of HCA shareholders’ pockets by blocking rival bidders and keeping a lid on the final price when the hospital chain was sold in 2006.
So reports The Tennessean, further observing:
The legal case resonates in Nashville and across the country in part because of Republican presidential candidate Mitt Romney’s former role as the founder of Bain Capital and because of the prominence of Tommy Frist Jr. and other members of the Frist family in Middle Tennessee’s business community.
…The notion that big private equity firms such as Bain, Goldman Sachs and the Blackstone Group engaged in a conspiracy to lower sales prices in leveraged buyouts from 2003 to 2007 remains a key claim in a federal lawsuit in Boston brought against those firms by former HCA shareholders, and by stockholders of other acquired companies — such as Neiman Marcus and Toys “R” Us — snapped up in Wall Street mega-deals before the recession.
HCA — then a public company — went private in 2006 in a $32.1 billion sale to private equity funds Kohlberg Kravis Roberts (KKR), Bain Capital and Merrill Lynch, as well as to family members of HCA’s co-founder Dr. Tommy Frist Jr. and other executives on HCA’s management team.
The size of the deal was a U.S. record at the time, but the federal lawsuit in Boston lays out the legal argument that the price tag was kept artificially low. Attorneys for the private equity firms being sued insist they did nothing wrong.

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