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Piano Industry Consultant
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www.jasonsmc@msn.com
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Retired owned of Jasons Music Center
Maryland/DC/No. VA
Family Owned and Operated Since 1937.
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Yamaha AvantGrand N1X | Roland RD 2000 | Sennheiser HD 598 headphones
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Wow. $35.00 per share would be a good return on my 200 shares, which were purchased for $22 per share. Maybe this will start a bidding war with Samick? The standstill agreement will not be in effect.
Since I'll never be able to own a Steinway, it was nice to be able to sat I owned Steinway.
So, who's Kohlberg?
Gary
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For those, like me, who don't understand much about financial matters, what does this mean besides Steinway will be owned privately? Is this good or bad for Steinway pianos and for the piano industry? What would be the typical reasons for this type of decision?
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Steinway has been privately owned most of its history.
Semipro Tech
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There are a bunch of press releases and stuff like that on the Internet now if you find one of the many news stories. The press releases make it sound as if the buyer wants to keep the company going and even to improve it in terms of sales, etc., which I hope is the case. Wikipedia has an entry on the buyer (Kohlberg) which makes it sound as though this is a possible outcome.
On the other hand, many purchases like this are made by companies that want to cash out a company that has a lot of liquid assets. I have to confess to a bit of worry about this outcome, especially since Steinway just sold Steinway Hall, so has a lot of cash around.
But, on the other hand, Steinway Hall did not bring close to what Kohlberg is paying, and the Steinway Board has apparently recommended that all shareholders tender their shares. So it could be hopeful!
Bob Snyder, what do you think?
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What would be the typical reasons for this type of decision? See About Kohlberg.
Last edited by Withindale; 07/01/13 12:17 PM. Reason: link corrected
Ian Russell
Schiedmayer & Soehne, 1925 Model 14, 140cm
Ibach, 1905 F-IV, 235cm
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There are a bunch of press releases and stuff like that on the Internet now if you find one of the many news stories. The press releases make it sound as if the buyer wants to keep the company going and even to improve it in terms of sales, etc., which I hope is the case. Wikipedia has an entry on the buyer (Kohlberg) which makes it sound as though this is a possible outcome.
On the other hand, many purchases like this are made by companies that want to cash out a company that has a lot of liquid assets. I have to confess to a bit of worry about this outcome, especially since Steinway just sold Steinway Hall, so has a lot of cash around.
But, on the other hand, Steinway Hall did not bring close to what Kohlberg is paying, and the Steinway Board has apparently recommended that all shareholders tender their shares. So it could be hopeful!
Bob Snyder, what do you think? I'm not Bob but I would be VERY surprised if this were geared to dismantle Steinway. It is simply too valuable an asset. There could be debt structure problems like the Bain Capital-Guitar Center situation. And there could be increasing pressure to move the NY factory to a less valuable location. And I agree that it could get VERY interesting if other bidders step up. (My stock in Steinway had a nice increase today.)
Piano Industry Consultant
Co-author (with Larry Fine) of Practical Piano Valuation
www.jasonsmc@msn.com
Contributing Editor & Consultant - Acoustic & Digital Piano Buyer
Retired owned of Jasons Music Center
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Family Owned and Operated Since 1937.
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Thanks, Steve, I had not thought of the move-to-less-expensive-real-estate risk. Depending on where it is, Steinway may not be New York Steinway any more. If manufacturing moves to a different country (China, to pick a wild example), they won't even be American any more.
I hope that they stay in NY. They have built a lot of their mystique over the years on being New York Steinway and using only American parts; it would be sad to lose that.
Will this affect the relationship between the NY and Hamburg arms of the company?
Last edited by Rank Piano Amateur; 07/01/13 12:09 PM.
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What would be the typical reasons for this type of decision? See About Kohlberg. Kohlberg say, "Kohlberg invests in companies where it can work in partnership with senior management to identify growth opportunities and implement fundamental operating and strategic changes, resulting in substantial increases in revenue and cash flow. Kohlberg’s use of moderate amounts of debt financing in acquiring companies affords the financial flexibility necessary to attain these corporate objectives." No doubt Kohlberg have spotted opportunities for growth and will welcome any suggestions in this thread that help to achieve their aims. No need for wild speculation, though.
Ian Russell
Schiedmayer & Soehne, 1925 Model 14, 140cm
Ibach, 1905 F-IV, 235cm
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The stock is now $35.09 a share. Weird.
Gary
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My thoughts about moving: The value of the Astoria property is very high and could command big bucks. A sale could infuse yet more capital. My guess is that Steinway might relocate to some area within New York State, to hold onto the tradition of 150 years. I doubt that it would relocate its manufacturing 'off shore.'
Hamburg and NY are the same company, all under the umbrella of LVB holdings. On paper they are the same corporation with independent management. Just as are the various other divisions manufacturing a full assortment of musical instruments, recordings, and sound equipment. I read it to mean that it has all been sold lock, stock and barrel.
But, then again, that only my opinion as I understand the sale as of today.
(Yea, I'm grinnin' too. Capital gains are going to be a bite, however.)
Marty in Minnesota
It's much easier to bash a Steinway than it is to play one.
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The stock is now $35.09 a share. Weird. That happens when a buy-out is announced.
Semipro Tech
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Will this affect the relationship between the NY and Hamburg arms of the company?
It's the same company. Whoever buys Steinway Instruments will get both piano factories as well and the band instrument manufacturers.
Gary
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I read about this early this morning - probably from the same press release that Steve saw.
This could get quite interesting. Steinway owns plenty of assets that could be sold while still making pianos.
I have my ideas of likely fallout, but from what I could find of Kohlberg's history - closing Steinway's doors are unlikely. Changing the way they do business seems quite likely.
My 2 cents,
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This doesn't sound good. Implementation of Operational Improvement Plan
Upon completion of the investment, the first phase of a new strategic plan is implemented. Typically, this phase focuses on excess cost reduction, implementing of best practices techniques to increase centralization of processes and improve efficiency. In Kohlberg’s Industrial Manufacturing and Consumer investments, this cost reduction phase is regularly accompanied by substantial cash flow improvements from working capital reduction. Additional liquidity is also regularly achieved in this phase through divesting non-core assets, which can be a driver of attractive deleveraging, business simplification and further cost improvement.
Targeted Growth and Business Repositioning
The last phase of Kohlberg’s ownership is a renewed focus on sales growth. In each new investment, a growth plan is implemented, frequently calling for savings generated through cost reduction to be reinvested back into the businesses in the form of product development, new market expansion or capacity improvement. In addition, in over half of its investments, Kohlberg will pursue and complete add-on acquisitions that afford an opportunity to complement existing products and distribution, while also creating impetus for further synergy and cost reduction.
Gary
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My thoughts about moving: The value of the Astoria property is very high and could command big bucks. A sale could infuse yet more capital. My guess is that Steinway might relocate to some area within New York State, to hold onto the tradition of 150 years. I doubt that it would relocate its manufacturing 'off shore.'
Hamburg and NY are the same company, all under the umbrella of LVB holdings. On paper they are the same corporation with independent management. Just as are the various other divisions manufacturing a full assortment of musical instruments, recordings, and sound equipment. I read it to mean that it has all been sold lock, stock and barrel.
But, then again, that only my opinion as I understand the sale as of today.
(Yea, I'm grinnin' too. Capital gains are going to be a bite, however.) Keep in mind also that Samick bought a huge parcel in Gallatin, TN only a small percentage of which is developed. The chairman of Samick owns such a large portion of Steinway stock that he had to be involved in the decision to go private.
Piano Industry Consultant
Co-author (with Larry Fine) of Practical Piano Valuation
www.jasonsmc@msn.com
Contributing Editor & Consultant - Acoustic & Digital Piano Buyer
Retired owned of Jasons Music Center
Maryland/DC/No. VA
Family Owned and Operated Since 1937.
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True, Steve. I hadn't considered that connection. There is something odd about saying Tennessee Steinway, y'all.
(WOW - New marketing angle: "Steinway - The Thoroughbred of Pianos")
Marty in Minnesota
It's much easier to bash a Steinway than it is to play one.
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Perhaps they will make a 'Crown Jewels' Nashville edition, finished in buckskin with 'Steinway and Boys' picked out tastefully in rhinestones on the lid.
Sauter Alpha 160, Yamaha N3 Avant Grand, Sauter Studio Upright (1974)
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Another possibility would be Samick divesting itself from Steinway and building pianos under their own name versus the pianos they build for Steinway. Samick has the plant and where with all to build an instrument of what ever quality they want in their new state of the art factory. They also have the financial resources to do what ever they want and are not dependent on Steinways portion of their business. On the opposite side Steinway in very dependent on Samick for their share of their business. Just a thought.
Piano Critic-A player and listener. Musician-Bachelors and Masters in Music. Retired from Professional life and just enjoying Music.
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