Hedge fund manager John Paulson has acquired Steinway for an estimated $512m (£327m) after a three-way bidding war which saw the company’s valuation rise from $35 per share to $40.
Private equity group Kohlberg & Co, which had entered a merger agreement with Steinway in July, dropped out of the bidding process when it was notified that the grand piano maker had received a new cash offer of $38 a share from Paulson & Co. The counter offer came during a ‘go-shop’ period of 45 days, during which Michael Sweeney, Steinway’s chief executive, had been soliciting rival bids.
South Korean musical instrument giant Samick, which already owns a substantial minority share in Steinway, then intervened with a $39-per-share offer. However, Mr Paulson responded with the final $40 bid and the deal was made. Under the terms of the agreement, Paulson will commence a tender offer to acquire all outstanding shares of the company, meaning that Steinway will become a privately held company for the first time since 1972, when it was sold to CBS by its original family owners.
‘Steinway has a 160-year history of manufacturing the highest quality pianos and musical instruments,’ said Mr Paulson. ‘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 commented: ‘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 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.’