Steinway Musical Gets Superior Acquisition Proposal - Update

(RTTNews) - Steinway Musical Instruments, Inc. (LVB), which agreed to be acquired by private-equity firm Kohlberg & Co. (KKR) in early July, Monday said it received a definitive offer to acquire its shares at $38.00 per share in cash from an affiliate of an investment firm with over $15 billion under management.

The company's board of directors has determined that the offer constitutes a superior proposal to that of Kohlberg. The offer includes a fully negotiated merger agreement and the related financing commitments. The stock is up 7 percent in pre-market trading.

It was on July 1 that Steinway said it agreed to be acquired by Kohlberg for $35.00 per share in an all-cash deal valued at about $438 million. The deal provided for a 45-day "go-shop" period during which time Steinway could seek alternative proposals.

The Steinway board unanimously supported the deal with Kohlberg, which was expected to close in the third quarter, following which the company would become a privately held entity.

Steinway said today its board carefully considered and consulted with its financial advisors and legal counsel before determining that the $38.00 per share offer constitutes a superior proposal.

The company issued notice to Kohlberg on August 11 and is prepared to negotiate with the private-equity firm to adjust the terms of the agreement with it, such that the offer from the bidder no longer constitutes a superior proposal.

Under the Kohlberg merger agreement, Kohlberg has certain matching rights, including the right to make adjustments in the terms and conditions of the agreement and related documents before the expiration of a three-business-day period ending on August 14.

If the company's board of directors determines that the offer continues to constitute a superior proposal after the expiration of such period, it expects to terminate the Kohlberg merger agreement and related documents. It will then enter into the merger agreement relating to the superior proposal.

The company's board of directors has not changed its recommendation with respect to the transaction with Kohlberg.

LVB closed at $36.23 on Friday. The stock is rising 7 percent in pre-market activity.