Hedge-fund Paulson & Co outbids Kohlberg & Co for Steinway & Sons

Steinway & Sons yesterday said that it has received a higher competing offer, a month after private equity firm Kohlberg & Co tabled a $438-million buyout offer for the 160-year-old manufacturer of musical instruments.

The maker of pianos, saxophones and trumpets did not reveal the identity of the new suitor, but describing it as ''an affiliate of an investment firm with more than $15 billion under management.''

The Wall Street Journal named hedge-fund manager John Paulson's investment firm Paulson & Co as the mystery bidder.

In a filing with the securities regulator, Steinway said that its bankers and lawyers have determined that the new bid was superior to its previous agreement signed with Kohlberg, which now has three days to match or top the new higher bid.

In July, Kohlberg & Co offered to buy Steinway for $35-per share in cash, a premium of 33 per cent based on the average closing price of the company's shares during the 90 trading days ended 28 June, (See: PE firm Kohlberg to buy Steinway Musical)

The agreement has a provision for a 45-day ''go-shop'' period during which time Steinway could solicit alternative proposals, and that ''go-shop'' period was due to expire on 14 August.

Paulson has offered to pay $38-a-share, or about $478 million, which is nearly 9 per cent higher than Kohlberg's offer. But the news of a higher bid sent Steinway shares to rise by more than 9 per cent to $39.59.

Founded in 1853 in Manhattan by German immigrant Henry Engelhard Steinway and his three sons, Massachusetts-based Steinway makes high quality musical instruments, including the Bach Stradivarius trumpets, Selmer Paris saxophones, C.G. Conn French horns, Leblanc clarinets, King trombones, Ludwig snare drums and Steinway grand pianos. 

Through its online music retailer, ArkivMusic, the company also produces and distributes classical music recordings.

The company has grown through aggressive acquisitions and has a workforce of over 1,600 people and 1 manufacturing facilities in the US and Europe.

For 2012, the New York Stock Exchange-listed company posted net income of $13.5 million on revenues of $353 million.

The company has 11 manufacturing facilities in the US and Europe and employs around 1,700 people.