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Steinway agrees to $US512 million takeover

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Iconic piano maker Steinway Musical Instruments has agreed to accept a $US512 million ($A565.28 million) takeover bid by the Paulson and Co investment group.

AAP reports that the price equates to $US40 per share. Paulson increased this price from its original offer of $US38 per share.

The announcement follows the decision by rival bidder, private equity firm Kohlberg & Co., which had offered just $US35 per share, to stop bidding.

The Paulson bid came during the ‘go-shop period’. This is a time when bids are often not actually expected. The go-shop period is used to ensure that companies can claim that they did everything possible to get good offers for shareholders. It can be a defence against possible law suits.

John Paulson said in a statement, "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."

Chairman and chief executive of Steinway, Michael Sweeney said in a statement, "At $US5.00 per share more than the offer from Kohlberg, this transaction provides shareholders significant additional value for their investment. 

"At the same time, our employees, dealers, artists, and customers can rest assured that Steinway will be in excellent hands under John Paulson's stewardship."

Steinway is renowned for its legendary Steinway grand piano. The list of virtuoso pianists who have played the pianos includes Arthur Rubinstein, Ignacy Paderewski, Vladimir Horowitz, Evgeny Kissin, Mitsuko Uchida and Lang Lang.

While Steinway said the acceptance of the Paulson offer is definitive, unsolicited offers could still be possible. If such an offer were to be accepted, Paulson would receive a termination fee of $US13.4 million.

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