US piano maker Steinway Musical Instruments has agreed to be bought by private equity group Kohlberg & Co in a $438m deal.
The 160-year-old company, famous around the world for its handmade grand pianos, had previously stated that it was not for sale, following a 17-month exploration of strategic alternatives. The Financial Times reported that: ‘The deal is the latest indication of the bets private equity groups are making in the luxury goods sector as they seek to profit from the recovering finances of the wealthy.’ Steinway’s board unanimously recommended the offer and expects to close the transaction later this year. Kohlberg plans to expand Steinway’s global reach by exploiting emerging markets in Asia.
The Massachusetts-based company – whose pianos have been used by pianists from Sergei Rachmaninov to Lang Lang – said in March it would sell its 88-year-old Steinway Hall building, which is across the street from Carnegie Hall in New York, for $46.3m. The company makes most of its earnings from high-end grand piano sales. From 2005 to 2008, grand piano sales fell an average of 20% annually in the US, reported the FT, and the financial downturn further constrained demand.
The Steinway family sold the company, which was founded in 1853 in a loft on Manhattan’s lower west side, to entertainment group CBS in 1972. Since 1996 Steinway has been traded on the New York Stock Exchange under the ticker LVB, for Ludwig van Beethoven.