Steinway, one of the world’s most famous piano maker, has high hopes of selling the company to Kohlberg & Co., a private equity firm. According to Steinway Musical Instruments, which has been in business for the past 160 years, an agreement of approximately $438 million has been reached for Kohlberg to buy over the company.
For over a century, Steinway pianos have become a status symbol and a must-have luxury in concert halls. However, the company suffered quite a setback during the recession. Although it continues to recover progressively, its shares unfortunately have not been able to return back to the peak before yet another recession occurred. Just a week ago, the company decided to closed on the sale of Steinway Hall just down the street from Carnegie Hall. In fact, that was its flagship showroom in Manhattan where generations of pianists visited. Currently, the economy in the United States is improving along with the fading of housing crisis. This has led Kohlberg to predicti a bright future for Steinway both at home as well as abroad.
At present, a typical Steinway grand piano borders at about $50,000. Some may even cost more than that. For Kohlberg, they have opened a tender offer to purchase all of Steinway’s outstanding stock for $35 per share. This is actually a 15 percent premium to its Friday closing price of $30.43. This deal also included a 45-day “go-shop” period, where Steinway will be allowed to seek out any other alternative bids. “Kohlberg’s long history of collaboration to grow and expand some of the world’s leading consumer brands makes us an ideal partner for Steinway to accelerate its global expansion, while ensuring the artisanal manufacturing processes that make the company’s products unique are preserved, celebrated and treasured,” stated Christopher Anderson, a Kohlberg partner.
The buyout is expected to be closed in the third quarter. “Families will want their children to play on the best piano,” explained Burt Flickinger III, president of retail consultancy Strategic Resource Group. He also added that emerging markets such as China (the world’s second largest economy, where incomes continue to grow) present a big opportunity for both Steinway and Kohlberg. After this deal was announced, the shares of Steinway Musical Instruments Inc. jumped by 15.9 percent ($4.85) to close at $35.28 on Monday. For the full story, do check it out here.
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