Investment firm Paulson & Co. agreed to buy Steinway Musical
Instruments Inc. (LVB) for about $503 million, in a deal to take
the 160-year-old piano maker private.
Paulson, run by hedge-fund manager John Paulson, will pay $40 in
cash for each Steinway share. The deal is expected to close in late
September.
The agreement comes a day after Kohlberg & Co. bowed out of
bidding for the company, after agreeing in June to buy Steinway for
$35 a share. Steinway said Monday that it had received a bid of $38
a share from an undisclosed investment firm that was believed to be
Paulson, triggering a three-day window for Kohlberg to make a
counteroffer.
Steinway terminated its previous merger agreement with Kohlberg
and will pay the firm a termination fee of approximately $6.7
million. The new Paulson merger deal doesn't provide for a
"go-shop" period, but the company is allowed to respond to
unsolicited offers in some circumstances and can accept a superior
offer until the Paulson deal closes, Steinway said, though a
break-up of the new deal would trigger a termination fee of about
$13.4 million.
Paulson, which is based in New York, rose to fame betting
against subprime mortgages ahead of the housing market
collapse.
The Paulson bid came during a so-called go-shop period, during
which a seller will search for bids to top what it has in hand.
Go-shop periods rarely ferret out higher offers, however, and often
are conducted to combat lawsuits claiming that companies didn't do
all they could to get good offers for shareholders.
Write to Ben Fox Rubin at ben.rubin@wsj.com
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