Why Steinway Musical Instruments Shares Popped

Why Steinway Musical Instruments Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Steinway Musical Instruments were hitting a high note today, gaining as much as 16% after agreeing to be taken private by Kohlberg & Company.

So what: Kohlberg, a private equity firm, said it would pay $438 million to take ownership of the famed maker of pianos and other musical instruments. Oddly, the announcement came just six months after Steinway had concluded a period of exploring strategic options by deciding not to sell itself. Today's deal seems to indicate that Steinway is getting a better price that it could find during the exploration period.

Now what: Kohlberg will pay all cash for the 160-year-old Steinway, and at $35 a share, it's paying a 15% premium over Friday's closing price of $30.43. Steinway shares actually closed north of that mark, at $35.28, indicating that investors are hoping for a juicier offer from another party, as part of the agreement with Kohlberg allows for a 45-day period to solicit other offers. Still, $35 a share is a post-recession high for the company, and near its all-time high around $38, meaning the Kohlberg offer looks like a good deal for shareholders, especially for a company with slim profits and stagnant growth.

To see if Steinway picks up any other offers in the next 45 days, add it to your Watchlist here.

The article Why Steinway Musical Instruments Shares Popped originally appeared on Fool.com.

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