Paulson & Co. to Acquire Steinway Musical Instruments
August 14, 2013 | 9:41 am CDT

WALTHAM, MA -  /PRNewswire/ -- Steinway Musical Instruments, Inc. ("Steinway" or the "Company") (NYSE: LVB) and investment firm Paulson & Co. Inc. ("Paulson") today announced that entities affiliated with Paulson and the Company have entered into a definitive merger agreement (the "Paulson Merger Agreement") for the acquisition of the Company in a transaction valued at approximately $512 million. Upon the completion of the transaction, Steinway will become a privately held company.

On August 13, 2013, Kohlberg & Company delivered notice to Steinway that it would not match the terms of the Paulson Merger Agreement. Subsequently, Steinway terminated its previously announced merger agreement with Kohlberg and will pay the firm a termination fee of approximately $6.7 million.

Under the terms of the Paulson Merger Agreement, an affiliate of Paulson is required to commence a tender offer to acquire all outstanding shares of the Company's common stock for $40.00 per share in cash. The Company's Board of Directors, representing all of the disinterested directors, unanimously recommends that stockholders tender their shares in the Paulson tender offer once it is launched.

John Paulson, President of Paulson & Co. Inc., said, "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."

Michael Sweeney, Chairman and CEO of Steinway stated, "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. At the same time, our employees, dealers, artists, and customers can rest assured that Steinway will be in excellent hands under John Paulson's stewardship. He shares the Company's commitment to the musical community and embraces our strategies to fully leverage our premier brands and extend our market leadership. We look forward to much success in this next chapter for Steinway."

The tender offer is required to be commenced within 5 business days and to remain open for at least 20 business days after launch. Any shares not tendered in the tender offer will be acquired in a second-step merger at the same cash price as paid in the tender offer.

Closing of the tender offer is conditioned upon customary closing conditions, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and receipt of German antitrust approvals. The offer is not subject to a financing condition. The transaction is expected to close in late September.

The Paulson Merger Agreement does not provide for a "go-shop" period, but the Company is permitted to respond to unsolicited offers in certain circumstances, and ultimately, to accept a Superior Proposal (as defined in the Paulson Merger Agreement) until the closing of the tender offer, subject to payment of a termination fee of approximately $13.4 million.

Allen & Company LLC is serving as financial advisor to the Company in this transaction. Skadden, Arps, Slate, Meagher & Flom LLP and Gibson, Dunn & Crutcher LLP are acting as legal advisors to the Company. Akin Gump Strauss Hauer & Feld LLP is acting as Paulson's legal advisor.

About Steinway Musical Instruments, Inc.

Steinway Musical Instruments, Inc., through its Steinway and Conn-Selmer divisions, is a global leader in the design, manufacture, marketing and distribution of high quality musical instruments. These products include Bach Stradivarius trumpets, Selmer Paris saxophones, C.G. Conn French horns, Leblanc clarinets, King trombones, Ludwig snare drums and Steinway & Sons pianos. Through its online music retailer, ArkivMusic, the Company also produces and distributes classical music recordings. For more information about Steinway Musical Instruments, Inc. please visit the Company's website at

About Paulson & Co. Inc.

Paulson & Co. Inc. is an investment management firm with approximately US$18 billion in assets under management and has offices in New York, London and Hong Kong.

Source: Steinway

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