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  • Steinway Update: Code Name “Edelweiss” Outbid by a True Piano Lover
    ◆ 추천레코드/┗⌒Pianostreet 2013. 10. 27. 04:32

    The calculation was rather simple — Mr. Paulson loves Steinway’s pianos, so why not buy the whole company?

    Back in July, equity firm Kohlberg & Company, reached an agreement with Steinway to buy the company for $35 a share ($485 million). But piano enthusiast and billionaire John Paulson, presumably after reading Piano Street’s post encouraging “others to make an offer”, began to pursue Steinway in earnest and read a book on the company to help bring himself up to speed.
    After finishing the book, Paulson surprised everyone by offering $38 a share on August 14. Kohlberg bowed out of the running, but later that day, a secret challenger turned up under code name “Edelweiss” with a raised bid of $39 a share. Not to be outdone, Paulson increased his bid to $40. Steinway declared him the winner, and the identity of the secret bidder “Edelweiss” was revealed. It was Samick Musical Instruments of South Korea, one of Steinway’s biggest shareholders before the buyout. For terminating its prior agreement with Kohlberg, Steinway must now pay the company $6.7 million — just about the cost of 50 new Steinway D pianos.

    The ownership change and it’s impact on the piano world

    Steinway Musical Instruments will now change from being a publicly owned company traded on the stock market into a privately owned company. From a pianist’s point of view, the change of ownership for one of the leading instrumental manufacturers would not in itself be a concern as long as their focus remains unchanged. But running a company with such a strong historical tradition and with such a precious market position as Steinway’s is always a balancing act between maximizing profits versus preserving and developing tradition and art.
    While Steinway pianos are most often extraordinary, many of their ancillary products such as Essex and Boston pianos, sheet music and apps are not exactly top notch. Those are chiefly designed to take advantage of Steinway’s brand recognition — obviously a strategy suitable for a publicly traded company in the struggle of regularly delivering good profits to its shareholders. Here, private ownership could provide a better opportunity to maintain quality by focusing on long term development of their main product.

    So what is Paulson’s plan?

    Piano Street got access to a document on US Securities and Exchange Comissions. Judging from that letter pianists can rest assured the company will be in good hands.

    “We will proudly support the company’s legacy as the premier global piano manufacturer, a reputation earned with an uncompromising commitment to quality appreciated by almost all of the world’s most demanding pianists,” Paulson said.

    “We’re fortunate in this case that John is a personal fan of our product. His love for the instrument gives him the insight as to how we can build the business.” said Michael T. Sweeney, Steinway’s chairman and chief executive.

    A conversation with Mr. Paulson:

     

    John Paulson – not yet a pianist

    Mr. Paulson played the drums, clarinet and saxophone into his 20s, but is not a pianist himself. However, he owns three Steinway grand pianos – models M, O and B – and intends to add a fourth, a model B incorporating a factory-installed player piano system. But since it is never too late to learn to play piano, Piano Street suggests that he skips the fourth self-playing instrument and instead starts taking piano lessons. Not only is it more rewarding to play by oneself, but it would certainly be an advantage for the owner of a such an extraordinary piano maker to know how to really make the instruments sing!

    Will you help him?

    Not that Paulson cannot afford his piano lessons, but let’s give him a kick start by offering our services:
    Anyone concerned about the maintained quality of the world’s leading piano brand, please join us in offering John free piano lessons if he drops by your area. (Post comment below.)

    We start by offering Steinway’s new owner a free piano lesson here at Piano Street’s office and studio on Borgargatan 6, Stockholm, Sweden. Welcome in John!



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