The Steinway Musical Instruments Inc. takeover saga reached an apparent coda Wednesday when the Waltham company agreed to a $512 million merger agreement with the hedge fund firm managed by billionaire John Paulson.
Steinway accepted an offer of $40 per share from Paulson & Co., about six weeks after the famed piano maker had agreed to a lower bid from a private equity firm. The instrument company had first accepted a $35 per share offer from Kohlberg & Co., prompting a round of bidding that eventually led to Paulson’s successful offer.
“The company’s proven business model and highly skilled employees provide a strong foundation on which to expand,” Paulson said in a statement. “We fully intend to maintain the superb quality of Steinway’s musical instruments, which are the finest in the world.”
Steinway’s original agreement with Kohlberg had triggered a 45-day “go-shop” period to solicit higher bids. The company said Monday that an investment firm later identified as Paulson & Co., had offered a better price of $38 a share, or $477 million. The announcement came just two days before the go-shop period was set to expire.
Kohlberg dropped out of the competition the next day. But another suitor, Samick Musical Instruments Co. of Korea, stepped in to offer $39 a share, according to regulatory filings. Paulson increased its offer to the eventual price of $40 per share.
“This transaction provides shareholders significant additional value for their investment,” Steinway chief executive Michael Sweeney said in a statement. “At the same time, our employees, dealers, artists, and customers can rest assured that Steinway will be in excellent hands.”
Steinway shares climbed 7.9 percent Wednesday, eclipsing the transaction price to close at $41.29.
The Paulson deal does not include a go-shop period, but Steinway is “permitted to respond to unsolicited offers in certain circumstances, and ultimately, to accept” a better offer until the tender offer closes, which will take at least 20 days.
Now Steinway has to cough up a $6.7 million fee to Kohlberg for ending the deal with the company and will be on the hook for another $13.4 million to Paulson if it goes with a higher bid in the tender offer period.