Steinway Musical Instruments Inc. (LVB:US) received a $475 million takeover offer from an unidentified investment firm, topping Kohlberg & Co.’s bid from last month and setting the stage for a bidding war for the owner of the 160-year-old piano maker.
The offer of $38 a share in cash, higher than Kohlberg’s $35-a-share bid, was from an affiliate of an investment firm with more than $15 billion under management, Waltham, Massachusetts-based Steinway said today in a statement, without naming the bidder. Julie Theriault, a spokeswoman, said that while the latest bidder asked for its identity to be kept secret, it would be revealed if a merger agreement was signed.
Steinway topped $38 in New York trading, indicating investors expect higher offers for the maker of Ludwig drums, Conn-Selmer band instruments and the company’s namesake pianos. Under the July agreement, Mount Kisco, New York-based Kohlberg has certain matching rights ending Aug. 14, Steinway said today.
“There’s a good chance we see another offer, a higher offer from Kohlberg, because there was little incentive for them to provide their best offer on the first round of bidding,” Bradd Kern, a portfolio manager for Irvine, California-based Armored Wolf LLC, said today in an interview. “It’s time for Kohlberg to play Beethoven or get off the bench.”
The shares rose 9.3 percent to $39.59 at the close in New York. Steinway had traded above Kohlberg’s bid since it was disclosed on July 1.
Steinway said it notified Kohlberg on Aug. 11 about the higher offer and is prepared to negotiate an improved proposal.
Last month’s deal included a 45-day period in which Steinway could solicit other proposals. Samick Musical Instruments (002450), the company’s largest shareholder, said it was weighing a counteroffer.
Private-equity investors had been interested in Steinway before this year, and two firms conducted due diligence in 2012, during a review of strategic alternatives that ended in December, Steinway said in a July 15 proxy filing.
One concern for buyers was the value of the company’s interest in Steinway Hall, the company’s New York showroom building, which would affect the amount of available financing, according to a filing. Steinway in March agreed to sell its stake in the New York City building for more than $46 million.
Kohlberg may increase its offer above $38, and bidding may rise as high as $41, said Sachin Shah, a special situations and merger arbitration strategist at Albert Fried & Co. in New York.
The latest offer is “a very good price,” Theriault said.
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