Steinway, maker of pianos, sold for $512 million to hedge fund

Steinway Musical Instruments -- the venerable maker of pianos and other classical-music instruments -- is celebrating its 160th anniversary this year and has given itself the gift of a new owner. The company has agreed to be acquired for approximately $512 million by the New York hedge fund Paulson & Co.

The bid topped a $438-million offer in July from Kohlberg & Co, the New York private-equity outfit.

Paulson has agreed to acquire Steinway for $40 per share -- its ticker symbol is “LVB� for Ludwig van Beethoven -- in a move that will take the company private. The announcement comes at a time of sluggish and waning sales for Steinway in the U.S., but strong demand in Asia.

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Steinway said in a release Wednesday that Kohlberg didn’t match the terms of the Paulson offer.

The sale is the latest business twist for Steinway, whose grand pianos are a favorite among the world’s top soloists and orchestras.

Steinway & Sons was founded in 1853 in New York by Henry Engelhard Steinway and his sons. The company became the world’s premier maker of baby and concert grand pianos, with a reputation for hand-crafted instruments and unparalleled quality. The company has been sold a few times, most recently in 1995 to the Selmer Co., a maker of musical instruments, for a reported $100 million.

The new deal comes just a few months after Steinway sold its opulent New York showroom near Carnegie Hall. The showroom was sold in March for a reported $46 million to a group of investors.

Steinway, which is headquartered in Massachusetts, is the preferred brand of pianists Lang Lang, Krystian Zimmerman and many others.

Paulson & Co. is headed by John Paulson and ranks as one of the largest hedge funds in the world.

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