UPDATE 1-Buyout executives emails purport to show collusion


* Court filing with emails among executives unsealed

* James to Roberts: "Together we can be unstoppable"

* TPG says competed vigorously for deals

* Blackstone, KKR decline to comment

(Adds details, background) By Tom Hals and Michael Erman

Oct 10 (Reuters) - Top executives at some of the world'slargest private equity firms, including KKR & Co LP andBlackstone Group LP , sent emails that allegedly show themplotting to scoop up companies on the cheap during last decade'sbuyout boom, according to court documents unsealed on Wednesday.

The emails were revealed in an unredacted version of alawsuit filed by shareholders in companies bought by privateequity firms, alleging buyout firms held down the value oftakeover targets by colluding on deals.

"We would much rather work with you guys than against you,"Blackstone President Tony James wrote in an email to KKRco-founder George Roberts that is quoted in the lawsuit.

The e-mail was allegedly sent after KKR decided to step downin the $17.6 billion bidding for semiconductor company Freescale- a sales process that a consortium led by Blackstone eventuallywon.

"Together we can be unstoppable but in opposition we cancost each other a lot of money," James wrote.

Blackstone and KKR declined to comment on the lawsuit.

Shareholders in more than two dozen companies bought byprivate equity firms between 2003 and 2007 claim to have lostbillions of dollars because of the alleged conspiracy aroundtakeovers, such as the leveraged buyout in 2006 of hospitalcompany HCA by Bain, KKR and others worth $32.1 billion,including debt.

The lawsuit alleges that shareholders lost at least $1billion because of collusion by private equity firms in the HCAdeal alone.

They have sued more than 10 firms including KKR, Blackstone,TPG Capital, Carlyle Group , Bain Capital LLC and GoldmanSachs Group Inc's private equity arm.

The evidence is presented to back up allegations that theinvestment firms used a quid pro quo approach to dealmaking. Theplaintiffs allege that various buyout firms underbid or declinedto bid in auctions of companies in return for a role as aco-investor or to prevent competition for companies theycoveted. For a FACTBOX with excerpts from the lawsuit, click:

It is not clear from the documents, however, what thecontext of these communications are. The complaint cites partsof emails to build the case against private equity firms, butdoes not disclose the entire messages.

Private equity firms have said that the quotes are taken outof context and merely reveal communications between companiesthat frequently work together on deals, not collusion to bringdown prices.

TPG said in a statement it never colluded to suppress pricesin buyouts and when it chose not to bid it was acting in thebest interests of its investors.

"We competed vigorously for deals that the firm both won andlost," the firm said in an email to Reuters.

The private equity firms had argued that unsealing thecomplaint would "harm the competitive position of the defendantsand their portfolio companies."

But a federal judge in Boston decided to release a mostlyuncensored version in response to a motion by the New YorkTimes.

The disclosures could embarrass the private equity firms,which already find themselves in an uncomfortable spotlightthanks to Mitt Romney's run for president as the Republicannominee.

Romney, who cofounded Bain, left the private equity firm in1999, before the transactions in question.


The 221-page complaint cites numerous deals andcommunications between senior private equity executives.

One of the deals called into question by the lawsuit isSunGard Data Systems Inc's 2005 takeover by a group of sevenprivate equity firms for $11.4 billion.

Silver Lake Partners, Bain Capital, Blackstone, GoldmanSachs Capital Partners, KKR, Providence Equity Partners and TPGbought the financial data company.

James Coulter, co-founder of TPG, wrote in an email thatbeing aggressive in a deal for SunGard would make enemies "whileperhaps benefiting no one but the (company's) shareholders",according to the lawsuit.

In the buyout of HCA, James Attwood, a managing director atCarlyle Group, wrote in an email to Alex Navab, co-head of KKR'sNorth American private equity business: "We will not in any wayinterfere with your deal. We would, of course, love to join youif you need more equity, but rest assured that you will not seeus in any other context on HCA."

Carlyle was not immediately available for comment.

An unnamed Blackstone executive wrote in an internal email:" deal represents good value and is a shame we let KKRget away with highway robbery."

However, the lawsuit claims KKR briefly upset the club rulesby bidding on Freescale, a semiconductor company that was in thesights of Blackstone. KKR's interest forced Blackstone toincrease its bid, according to the lawsuit.

Blackstone retaliated by signing a confidentiality agreementwith HCA. That signal of willingness to compete with KKR for thehospital company forced both companies to pull back, accordingto the lawsuit.

KKR eventually led the deal for HCA, and Blackstone led thedeal for Freescale.

The case is Dahl et al v. Bain Capital Partners LLC et al,U.S. District Court, District of Massachusetts, No. 07-12388.

(Reporting By Tom Hals in Wilmington, Delaware, and MichaelErman in New York; Editing by Paritosh Bansal, Andrew Hay andRichard Pullin)

((thomas.hals@thomsonreuters.com)(+1 610 544 2712)(ReutersMessaging: thomas.hals.thomsonreuters.com@reuters.net))