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Steinway Accepts Deal Couldn't Refuse, Sells to Kohlberg for $438 million

Stocks in this article: LVB

NEW YORK ( TheDeal) - Steinway Musical Instruments (LVB) changed its tune this week, agreeing to be acquired by private equity firm Kohlberg & Co. LLC for about $438 million.

The surprise announcement by the Waltham, Mass.-based musical instrument company came six months after the company, famed for its concert pianos, pulled back from exploring strategic alternatives that had resulted in serious offers being composed.

The latest transaction has a 45-day go-shop period during which the company may solicit alternative proposals. The deal is expected to close in the third quarter.

"Our agreement with Kohlberg represents an exceptional valuation for our shareholders, while also representing an important next step in the growth of Steinway," Steinway chairman and interim CEO Michael Sweeney said in a statement.

Mount Kisco, N.Y.-based Kohlberg will commence a tender offer of $35 per share in cash, which Steinway said is a 33% premium to the average closing price of its common shares for the 90 trading days ended June 28, and a 45% premium to the average closing price for the 52-week period ended June 28.

In July 2011 Steinway's former management, chairman Kyle Kirkland and chief executive Dana Messina, made an unsolicited offer with no financial details attached to acquire Steinway's band and online divisions. If it had been successful, it would have been a dismantling of the music instruments manufacturing business the two had built up over the past two decades.

Steinway, in its current iteration, was a rollup of several companies by Kirkland and Messina after they used a musical instruments maker company they took public to buy the concert piano maker in 1995, adopting the more famed Steinway name for their musical instruments empire.

After the former executives revealed their intention to bid for the band and online divisions in July 2011, Steinway hired Allen & Co. LLC to evaluate its alternatives.

In September 2011 Steinway passed a poison pill to ward off any unsolicited attempts to buy the company, as it evaluated the management-led buyout offer.

By January 2012, Steinway looked like it was going to do a deal with Kirkland and Messina, who had left the company and were backed by Steinway's largest shareholder, South Korean piano manufacturer Samick Musical Instruments Co. Ltd. Samick had about a 31.3% stake in the company as of May 8, according to regulatory filings.

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