Paulson & Co Tops Kohlberg To Take Steinway Musical Private In $512 Mln Deal

(RTTNews) - Steinway Musical Instruments, Inc. (LVB) agreed Wednesday to be taken private by investment firm Paulson & Co., Inc. for $40 per share in a deal valued at about $512 million after the offer was deemed superior to the Kohlberg & Co. LLC deal that was agreed upon in early July. The deal, which is not subject to a financing condition, is expected to close in late September.

Steinway's board of directors, representing all of the disinterested directors, unanimously recommends that stockholders tender their shares in the Paulson tender offer once it is launched.

Steinway shares are trading higher by more than 5 percent in early deals on Wednesday.

"Steinway has a 160-year history of manufacturing the highest quality pianos and musical instruments. The Company's proven business model and highly skilled employees provide a strong foundation on which to expand. We fully intend to maintain the superb quality of Steinway's musical instruments, which are the finest in the world," Paulson's President John Paulson said in a statement.

Investment firm Kohlberg had agreed on July 1 to take Musical private for $38 per share in a deal valued at about $438 million. The deal provided for a 45-day "go-shop" period for Steinway to seek alternative superior proposals, with Kohlberg to be given three business days to match the superior offer.

Steinway noted that Kohlberg on Tuesday notified Steinway that it would not match the terms of the Paulson deal, and the previously announced Kohlberg deal was terminated. Steinway will now pay Kohlberg a termination fee of about $6.7 million.

"The Company conducted a comprehensive "go-shop" process resulting in Paulson's offer, which reflects the attractive value of the Company's heritage and growth opportunities. At $5.00 per share more than the offer from Kohlberg, this transaction provides shareholders significant additional value for their investment," Steinway's Chairman and CEO Michael Sweeney stated.

The Paulson offer represents a 31.4 percent premium over Steinway's unaffected closing share price of $30.43 on June 28, the last trading prior to the announcement of the Kohlberg deal. The completion of the deal will see Steinway becoming privately-held company.

According to the terms of the deal, Paulson is required to commence a tender offer within 5 business days to acquire all outstanding shares of Steinway's common stock for $40.00 per share in cash. The tender offer is required to remain open for at least 20 business days after launch.

The current deal with Paulson does not provide for a "go-shop" period. However, Steinway is permitted to respond to unsolicited offers in certain circumstances until the closing of the tender offer, and if required, accept a Superior Proposal. The deal provides for a termination fee of about $13.4 million.

Waltham, Massachusetts-based Steinway is an 160-year-old company that makes pianos and other musical instruments. Its products include Bach Stradivarius trumpets, Steinway & Sons pianos, and Selmer Paris saxophones. The company, through its online music retailer ArkivMusic, also produces and distributes classical music recordings. In 2012, Steinway generated sales of about $354 million.

LVB closed Tuesday's regular trading session at $38.27, up $0.04 on a volume of 0.67 million shares.