Steinway Musical Instruments is to be acquired by an affiliate of private equity firm Kohlberg & Company in a transaction valued at approximately USD438m.
Upon the completion of the transaction, the Steinway will become a privately held company.
Under the terms of the agreement, an affiliate of Kohlberg will commence a tender offer to acquire all of the outstanding shares of the company’s common stock for USD35.00 per share in cash, representing a premium of 33 per cent based on the average closing price of the company’s common shares during the 90 trading days ended 28 June and 45 per cent based on the average closing price during the 52-week period ended 28 June.
The board of directors of the company unanimously recommends that the company’s stockholders tender their shares in the tender offer.
"Our agreement with Kohlberg represents an exceptional valuation for our shareholders, while also representing an important next step in the growth of Steinway," says Michael Sweeney, chairman and interim chief executive of Steinway. "Kohlberg has long been one of America’s premier private investment firms. We are delighted that they recognise the bright future for Steinway as well as value our great heritage. We look forward to this partnership as we continue our mission of making the world’s finest musical instruments without compromise."
Kohlberg partner Christopher Anderson says: "For over 160 years, Steinway’s skilled manufacturing artisans have been crafting the world’s finest musical instruments to perform with unequalled touch and tone. We feel fortunate to be selected to partner with Steinway and further its commitment to serving its artists and customers worldwide by producing the finest pianos and musical instruments available. 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."
The agreement provides for a 45-day "go-shop" period during which time the company may solicit alternative proposals to the transaction with Kohlberg including by way of waiving any existing "standstill" agreements. Any shares not tendered in the offer will be acquired in a second-step merger at the same cash price as paid in the tender offer. Closing of the tender offer is conditioned upon customary closing conditions, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and receipt of German antitrust approvals. The transaction is expected to close in the third quarter of 2013.
Allen & Company is serving as financial advisor to Steinway in this transaction. Skadden, Arps, Slate, Meagher & Flom and Gibson, Dunn & Crutcher are acting as legal advisors to the company. Ropes & Gray is acting as Kohlberg’s legal advisor.
