Piano Maker Steinway Sells for $512 Million
Steinway Musical Instruments Inc., best known for its grand exquisitely carved and pricey pianos. Steinway will now be taken over by a renowned financial services firm, Paulson & Co. News reports indicate that a deal valued at a whopping $512 million was signed after the hedge fund firm made sweeter music by raising its offer to $ 40 per share for investors. It seems that Paulson & Co. has correctly evaluated the true worth of the 160 year old company.
Reportedly the Waltham Mass based company terminated its existing sales agreement of $35 per share with private equity firm “Kohlberg& Co” after it was outbid by another investment firm. The offer of $ 40 per share was deemed pretty reasonable by Steinway and thereby helped to obtain a merger agreement. Hence if media reports are to be believed it seems that Paulson & Co beat Kohlberg’s offer by a pretty small margin. However this success has come at a price and it now seems that Steinway will have to pay a termination fee of around $6.7 million to Kohlberg.
The stock market reacted positively to the merger agreement and Steinway shares rose way above the Paulson bid amount to close at around $41.29. It was a net gain of over 8% on the original share price before the deal with Paulson became a reality. However under the terms and conditions of the new contract with Paulson & Co will have to commence an offer very soon in order to incorporate all outstanding shares of Stenway’s common stock. This process will help in making the musical instrument company a completely private concern.
Steinway Musical Instruments Inc. comes with a very rich history and has been in the business of making musical instruments for the past 160 years. Its grand and expensive pianos have been a status symbol among connoisseurs of fine music for several decades. Steinway pianos are considered to be a must have luxury accessory in big concert halls. Unfortunately the company suffered huge losses during the 2008 recession. Even though sales increased during the past few years it still was not enough to recoup the gigantic losses suffered during the financial downturn and return the company to its pristine glory. The CEO of Steinway released a statement claiming that the “Paulsons” offer reflected an attractive evaluation of the elite musical instruments company’s heritage and growth potential. The lucrative offer is also expected to provide its shareholders with much better returns.