Steinway accepts $438 million buyout from Kohlberg & Co.
07/01/2013 10:21 PM
07/01/2013 10:23 PM
The famed piano maker Steinway is hoping that the sale of the company to private equity firm Kohlberg & Co. will strike the right chord.
Steinway Musical Instruments, which has been in business for 160 years, said Monday that it has agreed to be bought by Kohlberg for about $438 million.
Steinway pianos have been a status symbol and a must-have luxury in concert halls for more than a century, but the storied company suffered during the recession. While it has recovered, its shares have not returned to their peak, reached just six months before the recession began.
However, with the housing crisis fading and the U.S. economy picking up steam, Kohlberg is betting on a bright future for Steinway at home and abroad, says Burt Flickinger III, president of retail consultancy Strategic Resource Group.
A typical Steinway grand piano costs around $50,000, but can run much higher.
Kohlberg, which will take the company private, is opening a tender offer to buy all of Steinway’s outstanding stock for $35 per share, a 15 percent premium to its Friday closing price of $30.43.
The deal is not likely to affect sales at Columbia’s only Steinway dealership, Rice Music House, said Robert Schaeffer, vice president of Rice.
“If anything, it’s a positive direction that the company would be going back into private ownership,” he said. “It’s not the first time it’s been sold. Each subsequent sale has resulted in improvements in operation and the quality of the product.”
Schaeffer noted that the companies entered into the contract on the one-year anniversary of Rice’s move from its historic Devine Street location to Village at Sandhill in Northeast Richland.
Despite the move, most of Rice’s regular customers have found the store in its new home, and it has been able to gain new customers, as well, Schaeffer said.
The store discontinued selling sheet music at its new smaller location, but it displays and sells just as many pianos as before, Schaeffer said, including the famed Steinways.
“We’re always going to have those great Steinways,” he said.
The board of the Waltham, Mass., piano company unanimously recommended that shareholders tender their stock. The deal includes a 45-day “go-shop” period in which Steinway may seek out alternative bids.
Steinway & Sons was founded in 1853 by German immigrant Henry Engelhard Steinway in a loft on Manhattan’s lower west side. Steinway was a master cabinet maker who built his first piano in the kitchen of his Seesen, Germany home, according to the company website.
Over the next 30 years, Steinway and his sons, C.F. Theodore, Charles, Henry Jr., William and Albert developed the modern piano.Flickinger says that emerging markets like China present a big opportunity for Steinway and for Kohlberg. “Families will want their children to play on the best piano,” Flickinger said of China, the world’s second largest economy, where incomes are on the rise.
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