By Gillian Tan 

Goldman Sachs Group Inc. and Bain Capital LLC have agreed to pay a combined $121 million to settle a closely watched lawsuit alleging that many of the U.S.'s biggest buyout firms colluded to keep down the prices they paid for companies during last decade's takeover binge.

Goldman and Bain will pay $67 million and $54 million, respectively, according to papers filed with the U.S. District Court in Boston on Wednesday. Both firms deny any wrongdoing in the settlements, which require court approval.

"We continue to believe the case is meritless and baseless, but ultimately determined that it was best for our investors and our firm to put this matter behind us in light of the costs and distraction of six years of litigation," said a Bain spokesman.

"We're pleased to put the matter behind us," said a spokeswoman for Goldman's private-equity arm.

The case was brought by investors who sold their shares in 27 companies to a number of private-equity firms as part of several boom-era buyouts. At issue is whether the buyout firms, which had a tendency around that time to team up to acquire multibillion-dollar companies in what are known as club deals, had agreements to not compete with each other on certain deals, thus driving down prices paid to shareholders.

The settlements, and the dismissal of two defendants last year, leave five private-equity firms in the lawsuit: Blackstone Group LP, Carlyle Group LP, KKR & Co., Silver Lake Partners and TPG. The lawsuit is set to go to trial in November.

"We continue to believe the litigation is without merit," said a KKR spokeswoman. A TPG spokesman said the firm continues to "strongly dispute" the allegations and expects to prevail.

Representatives for Carlyle, Blackstone and Silver Lake declined to comment.

The lawsuit alleges the firms agreed not to "jump" each other's deals, including leveraged buyouts of Freescale Semiconductor Inc. and the hospital operator now known as HCA Holdings Inc. Jumping a bid means trying to trump the offer in an agreed-upon buyout deal.

"We never asserted that club deals in and of themselves were illegal," said K. Craig Wildfang, a lawyer for the plaintiffs. "But where the purpose of the club and effect of the club is to reduce competition among LBOs, then they may be anticompetitive and unlawful."

Mr. Wildfang, who co-chairs the antitrust practice at law firm Robins, Kaplan, Miller & Cerisi LLP, said he believes the plaintiffs can prove damages in the range of $10 billion.

Laura Kreutzer contributed to this article.

Write to Gillian Tan at gillian.tan@wsj.com

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