Steinway (LVB) Stock Down as Kohlberg Drops Out

Shares of Steinway Musical Instruments Inc. (LVB) closed down -1.32 or -3.33 percent on Tuesday, after news that Kohlberg & Co. had dropped out of their $438 million or $35 per share bid for the company. Kohlberg refuses to match the bid Steinway received from Paulson & Co announced on Monday. According to some sources, which have yet to be confirmed, Paulson & Co. offered $38 per share for Steinway in a deal worth about $477 million, which drove Steinway & Co. stock to a new record high of $39.90 per share on Monday, closing the day at $39.53.

Traders were expecting a bidding war to ensue between the buyout firm and the hedge fund. Daily Chart Waltham, Massachusetts based Steinway Musical Instruments Inc. was founded in a Manhattan loft in 1853 by Henry Engelhard Steinway, a German immigrant. The company has since grown into a global musical instrument manufacturing multinational corporation. The company sells its products to professional and amateur musicians, orchestras and schools through a worldwide network of dealers. Its product lines include Steinway & Sons pianos, Ludwig drums, Selmer Paris saxophones and Leblanc clarinets among others. On Tuesday, Steinway announced that in a regulatory filing, Kohlberg had waived its right to match or outbid the competing offer. Kohlberg had made Steinway a $35 per share bid in July with a clause allowing Steinway 45 days to "go-shop" for a better offer. Steinway did not disclose the name of the new bidder, stating in their press release that Steinway had "received a definitive offer to acquire all of the outstanding shares of the Company's common stock at a purchase price of $38.00 per share in cash from an affiliate of an investment firm with over $15 billion under management. The definitive offer includes a fully negotiated merger agreement and the related financing commitments." According to some sources, billionaire hedge fund tycoon John Paulson's Paulson & Co. is the most likely candidate and fits the description in Steinway's press release. Nevertheless, Tuesday's filing by Kohlberg put a damper on the stock rally, sending shares down more than three percent. John Paulson is primarily known as a trader that made billions betting against the sub-prime mortgage market. The Steinway buyout will be the first time he leads a leveraged buyout, although he has worked on other deals before. Steinway stock has been a stellar performer since June when share began creeping higher. The stock began the year at 21.75 and has risen more than 43 percent YTD. The attraction for the company is justified, with a strong cash flow, an excellent balance sheet and stable business, the mystery bidder is getting a gem of a company. Another consideration is the real estate for the manufacturing facilities in Europe and the United States, which are worth a considerable amount. While the offer seems high, the deal has not been consummated; there is still a deadline of midnight tonight, August 14th for another suitor to make a higher bid. Other News About LVB Why Steinway Is Likeley To Be Sold To A Hedge Fund Manager NPR article listing the reasons the company will get taken over by a fund. Steinway Schedules Second Quarter 2013 Earnings Release for August 6th Earnings will be released on August 6th. Other Stocks in the News Apple Jumps as Icahn Tweets About Large' Stake Icahn discloses on Twitter. JCPenney's 100-Year Bonds Swoon Amid Retailer's Turmoil Retailer loses on 100 year gamble. Copyright 2013 by, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc. No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions. We are not responsible for claims made by advertisers and sponsors. Anyone who makes decisions based on what they read here does so at their own risk and cannot hold WebFinance Inc. (DBA, Inc.) or its employees responsible.

Published on Aug 14, 2013
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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