15 Aug 2013

Steinway sold to US hedge fund

8:49 am on 15 August 2013

Steinway Musical Instruments has reached a buyout deal with Paulson & Co, a US hedge fund firm.

The deal values the firm at $US512 million and trumps an earlier offer by Kohlberg & Co.

Steinway still has 25 days to accept better offers, but the BBC reports Kohlberg has already said it will not bid again.

The piano maker, which has been in business for 160 years, has been looking for a buyer since December 2012. Its sales grew by only 2% last year.

Steinway shares rose 6% to $US40.51 on Wednesday, close to the offer price.

The BBC reports the purchase is seen as an unusual move for John Paulson, who heads the Paulson & Co fund.

He rose to prominence in the wake of the financial crisis in 2007 when he bet against subprime mortgage investments.