After announcing a bid of $38 a share two days ago from an unnamed "affiliate of an investment firm with over $15 billion under management" that topped an earlier offer of $35 a share from Kohlberg & Company, Steinway Musical Instruments (NYSE: LVB ) said this morning that it has accepted a $40-per-share offer from investment firm Paulson & Co.
The deal to take Steinway private is valued at $512 million, according to its press release. Shares closed yesterday at $38.27 and are at $41.45 as of this writing.
Steinway's decision to accept the offer from Paulson & Co. follows yesterday's notice from Kohlberg that it would not match the higher bid, resulting in Steinway's decision to end its agreement with Kohlberg. Steinway will pay Kohlberg approximately $6.7 million as a termination fee.
Michael Sweeney, chairman and CEO of Steinway, was quoted in the company press release as saying, "At $5.00 per share more than the offer from Kohlberg, this transaction provides shareholders significant additional value for their investment."
While the tender offer is required to begin within five business days and remain open for at least 20 business days, Steinway can respond to additional unsolicited offers for its outstanding shares, should any competing offers arise, according to the agreement. However, breaking the deal with Paulson would cost it $13.4 million.
Upon completion of the deal, which is expected to close in late September, Steinway intends to become a privately held company. The transaction is subject to customary closing conditions.
Steinway & Sons was founded in 1853 by German immigrant Henry Engelhard Steinway in a Manhattan loft. Steinway was a master cabinet maker who built his first piano in the kitchen of his home in Germany, according to the company.
During the ensuing three decades, Steinway and his sons developed the modern piano. The company's products now include Bach Stradivarius trumpets, Selmer Paris saxophones, C.G. Conn French horns, Leblanc clarinets, King trombones, Ludwig snare drums, and Steinway & Sons pianos.
-- Material from The Associated Press was used in this report.