Tags: steinway | bought | pianos | 512 million | paulson

Steinway Bought: Piano-maker Agrees to Sale to Paulson for $512M

Wednesday, 14 Aug 2013 05:52 PM

By Robin Farmer

Steinway Musical Instruments Inc., whose grand pianos take nearly a year to create, will soon have a new owner.

New York hedge fund Paulson & Co. has offered to buy the 160-year-old piano maker for about $512 million or $40 a share, reported Bloomberg News, and Steinway agreed.

The deal, expected to close in September, will take the company private.

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The new Paulson merger announced Wednesday topped a $438 million offer from Kohlberg & Co., the New York private equity outfit, which recently bowed out of bidding after agreeing in June to buy Steinway for $35 a share, the Wall Street Journal reported.

Steinway will pay a termination fee of about $6.7 million to Kohlberg. The winning bid occurred during the “go-shop” period, which involves a seller seeking higher bids than what it currently has. The Paulson merger does not include a “go-shop” period; Steinway can respond to unsolicited offers. It would, however, be required to pay about $13.4 million to break off the sales agreement, the Wall Street Journal said.

Steinway Chairman and CEO Michael Sweeney said the new offer reflects Steinway's heritage and growth potential, according to The Associated Press.

The company said in December it had decided not to sell itself after a 17-monthlong review of strategic options.

Kohlberg made its offer six months later, valuing the company at about $438 million.

Steinway & Sons was founded in 1853 by German immigrant Henry Engelhard Steinway. A master cabinet maker, he built his first piano in the kitchen of his home in Germany, according to the company.

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