Paulson & Co., the hedge fund owned by billionaire John Paulson, announced Wednesday that piano manufacturer Steinway agreed to be acquired for $512 million.
Paulson & Co. will pay $40 in cash for each share of Steinway (NYSE:LVB). The previous bid of $38 a share was raised after the South Korean company Samick Musical Instruments Co Ltd. offered $39 per share. The transaction is expected to be completed in September and Steinway will be delisted then from the stock exchange. Steinway shares were up 7.9 percent today, closing at $41.29.
“We will proudly support the company’s legacy as the premier global piano manufacturer, a reputation earned with an uncompromising commitment to quality appreciated by almost all of the world’s most demanding pianists,” John Paulson said in a statement.
The agreement with Paulson & Co. comes a day after the hedge fund Kohlberg & Co. announced that it intends to make a better offer after in June offered to pay $438 million, or $35 per share, for taking over Steinway. Piano manufacturer Steinway ended its previous arrangement with Kohlberg & Co. and will pay a termination fee of approximately $6.7 million. The termination fee with Paulson would be $13.4 million.
Steinway & Sons was founded in 1853 in an apartment in Manhattan. According to the information published on its website, 99% of all pianists have chosen Steinway pianos in 2007. Famous artists such as Cole Porter and Sergei Rachmaninoff used Steinway pianos.
Arnold Ursaner, an analyst with CJS Securities, said: “When you are dealing with any global luxury brand, the value is in the eye of the beholder. To me it’s no different than a work of art, it’s what someone is willing to pay for that unique asset. The piano business of Steinway has a great pedigree and is not easy to come by.”
Steinway also makes other musical instruments such as Leblanc clarinets, King trombones, Selmer Paris saxophones and Bach Stradivarius trumpets.
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