Steinway agrees to revised $512 million bid from Paulson & Co
16 August 2013
Steinway Musical Instruments Inc has agreed to be taken private by Paulson & Co, after the hedge fund owned by billionaire John Paulson raised its offer to $40 per share, valuing the 160-year-old manufacturer of musical instruments at about $512 million.
The maker of pianos, saxophones and trumpets said that Paulson & Co raised its offer to $40 a share from $38 after South Korea's Samick Musical Instruments Co Ltd tabled a $39 per share bid.
Steinway had in early July agreed to be acquired by private equity firm Kohlberg & Co for $35 per share offer or $438 million. The agreement had a provision for a 45-day ''go-shop'' period during which time Steinway could solicit alternative proposals. (See: PE firm Kohlberg to buy Steinway Musical)
But a day before the ''go-shop'' period was due to expire on 14 August, Paulson & Co tabled a competing $38-a-share, or about $478 million - nearly 9 per cent higher than Kohlberg's offer.
Kohlberg backed out from a bidding war, but Samick Musical, Steinway's biggest shareholder, entered the race with a counter $39 per share bid, which was immediately topped by Paulson & Co with a $40 a share offer.
Michael Sweeney, chairman and CEO of Steinway 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 …….. . We look forward to much success in this next chapter for Steinway,'' he added.
Steinway, whose pianos can take almost a year to make and cost around $200,000, will pay Kohlberg a termination fee of $6.7 million and $13.4 million as break-up fee to Paulson & Co in case it agrees to a superior offer from another suitor.
Founded in 1853 by German immigrant Henry Engelhard Steinway, and his three sons, Massachusetts-based Steinway makes high quality musical instruments, including the Bach Stradivarius trumpets, Selmer Paris saxophones, C.G. Conn French horns, Leblanc clarinets, King trombones, Ludwig snare drums and Steinway grand pianos.
Through its online music retailer, ArkivMusic, the Company also produces and distributes classical music recordings.
The 160 year-old company has grown through aggressive acquisitions and has a workforce of over 1,600 people and 1 manufacturing facilities in the US and Europe.
For 2012, the New York Stock Exchange-listed company posted net income of $13.5 million on revenues of $353 million.
The company has 11 manufacturing facilities in the US and Europe and employs around 1,700 people.