Steinway is currently controlled by US hedge fund billionaire John A. Paulson. His firm, Paulson & Co., purchased the company almost exactly five years ago for $512million. This followed a bidding war with Kohlberg & Company (a private equity firm), and with Samick Musical Instruments, then Steinway’s largest shareholder.
Paulson’s interest in the Steinway company stemmed from his love of the instrument. At the time he acquired the business he personally owned three Steinways, a Model M studio grand (5’ 7”), a larger Model O living room grand (5’ 10-3/4”), and a Model B “classic” grand (6’ 11”).
Steinway was family owned from its foundation in 1853 right up until 1972, when it was sold to the CBS Corporation. The new owners introduced a series of cost cuttings measures, which were generally considered to be detrimental to the quality of the instruments.
In 1985, the company was sold to a group of Bostonian investors as Steinway Musical Properties, and in 1995 the company merged with musical instrument maker Selmer to form Steinway Musical Instruments. This new operation went on to acquire several other instrument manufacturers.
In August 1996 Steinway Musical Instruments floated on the New York Stock exchange. Their NYSE ticker symbol is LVB (for Ludwig van Beethoven). Paulson’s winning bid priced each share at $40.
Today there are essentially two divisions: Steinway (pianos), which also incorporates the Boston and Essex brands; and Conn-Selmer, which manufacturers band and orchestral instruments. These include Selmer (saxophones), Leblanc (clarinets), King (trombones), C.G. Conn (french horns), and Ludwig (drums).
The Chinese interest comes from the state-owned China Poly Group. Founded in 1992, it is the parent company for literally hundreds of subsidiaries. It initially acted as an international sales representative for the Chinese defence manufacturing industry, but expanded into the trading and development of natural resources, construction, real estate, fishing, and much more. It was once described as “the most important company you’ve never heard of”. More recently it has moved into cultural activities. These include theatrical and televisual production, film distribution, antique collection, and the auction business. Poly Auction (Hong Kong), the group’s Hong Kong listed cultural arm, owns China’s largest state-owned auction house. This is now the third biggest in the world.
The growth of China Poly Group’s involvement in the global Arts sector may be the main reason for their interest in Steinway. Xu Niansha, chairman of China Poly Group Corp, has previously stated that the American market is an integral part of the company’s global business footprint, and that they would continue to pursue trade and investment opportunities in the US, especially in the cultural and real estate sectors.
The Steinway brand is well known amongst China’s middle and upper classes, who consider the owning a Steinway piano as something to aspire to. Sales in China are expected to see 30-40% growth over the next few years.
Steinway themselves opened a new Asia-Pacific headquarters in Shanghai only this year. The new facility becomes Steinway’s third-largest global operating center after New York and Hamburg.
China Poly Group’s interest in Steinway may now spur other companies to come forward. However, anyone wanting to acquire Steinway Musical Instruments will need deep pockets. Estimates put the company’s value at around $1billion.
World Piano News will report any future developments relating to this possible sale.
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