By William Alden - NY Times
The maker of Steinway & Sons pianos is hoping that a duet with private equity will be a harmonious one.
Steinway Musical Instruments announced on Monday that it had agreed to be acquired by the private equity firm Kohlberg & Company in a deal worth roughly $438 million.
The offer of $35 a share represents a 33 percent premium over Steinway’s average closing price in the 90 trading days that ended June 28. Compared with the average closing price during the 52 weeks that ended June 28, the offer represents a premium of 45 percent, the company said.
Steinway’s stock jumped at the start of trading on Monday, rising more than 15 percent, to just above $35 a share. (The company’s ticker symbol, LVB, is a reference to the initials of Ludwig van Beethoven.)
The deal is the latest twist for the 160-year-old piano maker, whose instruments can be found in concert halls and living rooms around the world. In recent years, the company, which is based in Waltham, Mass., has had to adjust to a weak economy and changing cultural tastes.
In March, the company reached an agreement to sell Steinway Hall, the 88-year-old building across the street from Carnegie Hall in Manhattan where renowned pianists and amateurs alike have tried out pianos.
Kohlberg & Company, a firm co-founded by Jerome Kohlberg (who previously was one of the founders of Kohlberg Kravis Roberts & Company), emphasized that it would aim to preserve Steinway’s storied heritage.
In buying Steinway, the firm plans to “accelerate its global expansion, while ensuring the artisanal manufacturing processes that make the company’s products unique are preserved, celebrated and treasured,” Christopher W. Anderson, a Kohlberg & Company partner, said in a statement.
The company, founded in 1853 in a Manhattan loft by Henry Engelhard Steinway and his three sons, expanded rapidly to become the world’s largest piano manufacturer by 1860. It opened a factory in Hamburg, Germany, in 1880, and toasted its success in 1925 with the opening of Steinway Hall on West 57th Street in New York.
The company was acquired by Selmer Industries in 1995 and, under the name Steinway Musical Instruments, went public the following year. In addition to its flagship pianos, the company sells trumpets, saxophones, French horns, drums and other instruments. It has long had a factory in Astoria, Queens; after years of being a tenant there, it bought back the building in 1999.
“Our agreement with Kohlberg represents an exceptional valuation for our shareholders, while also representing an important next step in the growth of Steinway,” Michael Sweeney, chairman and interim chief executive of Steinway, said in a statement. “We are delighted that they recognize the bright future for Steinway as well as value our great heritage.”
The deal provides for a so-called go-shop period of 45 days in which Steinway can invite rival bids. Otherwise, the transaction is expected to close in the third quarter of this year.
Steinway is being advised bey Allen & Company and the law firms Skadden, Arps, Slate, Meagher & Flom and Gibson, Dunn & Crutcher. Kohlberg & Company is being advised by the law firm Ropes & Gray.