NEW YORK ( TheStreet) --A management document by Steinway Musical Instruments ( LVN) supporting Paulson & Co.'s $500 million tender offer reveals that Samick Musical Instruments was considering another bid at the close of the auction process. On Aug. 14, Steinway announced a $40 per share buyout agreement with Paulson that trumped an announced deal with Kohlberg & Co. that had included a go-shop period. Of 65 parties that were contacted during the go-shop, 11 signed confidentiality agreements along with Paulson. Samick previously revealed in a 13D filing with the Securities and Exchange Commission following the announcement of the Paulson deal that it had bid $39 per share for Steinway. Samick owns about 32% of Steinway. Paulson's tender offer, launched Wednesday, has an initial expiration date of Sept. 18. Steinway shares have traded above the Paulson offer since it was announced on expectations that Samick might still make another bid. The Steinway 14D9, filed with the SEC in support of the tender offer, reveals that Samick initially indicated it would not be willing to pay more than $39 per share, and if Paulson offered $40 before Samick submitted a $39 proposal, Samick would enter a commitment to support the $40 offer. At first Paulson declined to raise to $40 per share and Samick, on proposing its $39 bid, said it would no longer provide a commitment to support another party's offer at $40 per share. Samick's proposal included financing commitments. When Paulson raised to $40 per share it was conditioned on support agreements from Samick and ValueAct Capital Management and a breakup fee of $13.35 million, or $1.05 per share. The support agreement condition was waived after Samick declined to offer one. At the end of the process, Samick declined to increase its $39 offer at a "best and final" deadline, but said if an unconditional offer higher than that price was presented, Samick would submit a revised offer in an "expeditious manner." Samick also said that while it would not agree to support a $40 bid, it would agree to tender its shares into a $41 per share offer. Topping Paulson and absorbing the breakup fee would put Samick over a $41 deal price.
The 14D9 states that, other than a request to destroy confidential information, there have been no communications with Samick since the Paulson deal was announced. Samick did not respond to an inquiry. Steinway shares have slipped from a market close high of $40.74 on Aug. 16 to $40.45 Thursday at a 45 cent, or 1%, premium to the Paulson deal. -- Written by Scott Stuart in New York