Private equity firm Kohlberg & Co. plans to spend roughly $438 million on premium piano producer Steinway. The high-grade concert hall piano business was founded by a German immigrant to the US in 1853.
Steinway Musical Instruments, which owns the iconic Steinway & Sons piano brand, said on Monday that it had agreed to a buyout offer that is expected to close in the next two months.
The deal, worth roughly $438 million (335.4 million euros), includes a 45-day period in which Steinway can seek a better offer. Private equity firm Kohlberg & Co. opened a tender offer to buy all outstanding stock for $35 per share, 15 percent higher than the closing value last Friday. News of the deal on Monday, however, pushed Steinway stock just above the $35 mark.
A maker of many high-grade musical instruments, Steinway is still best known for its grand pianos. Typical models cost around $50,000 - with some running much higher - and can be found in most of the world's major concert halls.
The company struggled in the 2008 recession but its stock has since returned to levels close to its all-time highs from 2006.
"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," Kohlberg partner Christopher Anderson said.
From cabinets to chords
Master cabinet maker Heinrich Engelhard Steinweg, born in Seesen in Germany in 1797, founded the company in 1853. Having moved to New York and anglicized his name to Henry E. Steinway, he began his US business from a loft on Manhattan Island's lower West Side. Targeting the top end of the market from the outset, Steinway sold his first piano in the US for $500 - more than double typical piano prices of the day.
According to the company website, the cabinet maker had turned his hands to the piano as early as 1836, secretly making his first from home. It became a part of Steinway's German business before he emigrated. He arrived in New York with his family in 1850. Together with his five boys, C.F. Theodore, Charles, Henry Jr., William and Albert, Steinway cornered the premium piano market. Nowadays, the company also offers mid-level pianos under the "Boston" brand name and entry-level models tagged "Essex," although most of the production is outsourced.
Steinway & Sons has factories in New York and Hamburg, while parent company Steinway Musical Instruments is based in Waltham, Manhattan. The company also makes trumpets, saxophones, French horns, clarinets, trombones and snare drums.
msh/ch (AFP, AP)
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