Bidding war for Steinway erupts

Steinway Musical Instruments Inc. said Monday that an investment firm has offered to pay $38 per share, or about $477 million, for the piano maker, topping an earlier bid from Kohlberg & Co.

The prospect of a bidding war sent Steinway shares up 8 percent to $39.10 in premarket trading Monday.

The Waltham, Mass.-based company identified the new potential buyer only as an investment firm with more than $15 billion under management.

Steinway, which includes Steinway & Sons the legendary Astoria piano maker, had agreed to sell itself to investment firm Kohlberg & Co. in July for $35 per share, or about $438 million.

The new bid is a 25 percent premium to Steinway's closing price just before Kohlberg's bid was announced.

Kohlberg has until Wednesday to negotiate with Steinway and lay out a better bid. Otherwise, the deal between it and Steinway will be terminated and the musical instruments maker will agree to be bought by the other firm.

Steinway has been in business for 160 years. Its pianos have been a status symbol and a must-have luxury in concert halls for more than a century, but the storied company suffered during the recession. While it has recovered, its shares still trade below their peak of $39.23, reached six months before the downturn began.

The stock is up 71 percent this year. In early trading Monday it was up $3.92 at $39.25.