Steinway Musical Instruments Agrees to New Buyout by Paulson
August 14, 2013 | 10:00 am CDT

Steinway Musical Instruments Agrees to New Buyout by PaulsonWALTHAM, MA - Steinway Musical Instruments has received a better offer from investment firm Paulson & Co., a month after agreeing to be acquired by Kohlberg & Co., a private equity firm. The new transaction with Paulson is valued at approximately $512 million.

Under the terms of the agreement, Paulson agrees to acquire all outstanding shares of Steinway's common stock for $40 per share in cash. The transaction is expected to close in September 2013 and upon completion, Steinway (NYSE: LVB) will become a privately-held company.

Steinway announced on Aug. 12 that it had received a superior offer for its common stock than the $35 per share offered by Kohlberg. On Aug. 13 Kohlberg notified Steinway that it would not match the terms and Steinway terminated the merger agreement, which had been valued at approximately $438 million. According to the company, Steinway will pay a termination fee of approximately $6.7 million.

In a statement, Steinway Chairman and CEO Michael Sweeney said, "The company conducted a comprehensive 'go-shop' process resulting in Paulson's offer, which reflects the attractive value of the company's heritage and growth opportunities. At $5.00 per share more than the offer from Kohlberg, this transaction provides shareholders significant additional value for their investment."

John Paulson, president of Paulson & Co. Inc., also stated, "Steinway has a 160-year history of manufacturing the highest quality pianos and musical instruments. The company's proven business model and highly skilled employees provide a strong foundation on which to expand. We fully intend to maintain the superb quality of Steinway's musical instruments, which are the finest in the world."

Founded in 1853, Steinway is perhaps best known for Steinway & Sons pianos. Credited with the development of the modern piano, Steinway & Sons has had more than 150 patents granted on its products. Other musical instruments products by Steinway include: Bach Stradivarius trumpets, Selmer Paris saxophones, C.G. Conn French horns, Leblanc clarinets, King trombones and Ludwig snare drums.

Through its online music retailer, ArkivMusic, Steinway also produces and distributes classical music recordings.

Have something to say? Share your thoughts with us in the comments below.