- 1850 – At age 50, Henry E. Steinway and his family emigrate from Seesen, Germany to New York, U.S.A.
- 1853 – Steinway & Sons is founded by Henry and his sons.
- 1866 – The first Steinway Hall is completed on 14th Street
- 1880 – A second Steinway factory is built in Hamburg Germany
- 1925 – The second Steinway Hall is constructed on East 57th Street in Manhattan
- 1972 – Steinway & Sons is purchased by CBS for $19.3 million. (At that time CBS owned many enterprises in the entertainment industry, including guitar maker Fender, electro-mechanical piano maker Rhodes, and the New York Yankees baseball team).
- 1985 – Steinway & Sons is purchased by the Birmingham Family for $55 million.
- 1995 – Steinway & Sons is purchased by Selmer / Steinway Musical Properties for $100 million.
- 1996 – Steinway Musical Properties becomes a publicly held company listed on the NYSE as LVB (for Ludwig Van Beethoven)
- 2013 – This is where today’s story begins. A perfect storm.
This beautiful 16 story building was completed in 1925 and contains 16 floors. The first four were used for pianos and the rest of them were rented out. But by the early 21st century the high cost of maintenance and repair made it prohibitive to continue to rent those upper floors so they were closed off.
The perfect storm for New York real estate came in 2013 when:
1) the cost of land in Manhattan was going through the roof,
2) the cost of maintenance was skyrocketing, and
3) the value of an 85 year old building was declining rapidly.
So on April 8th, 2013, Steinway announced plans to sell the building that housed Steinway Hall on East 57th Street. Little did they know that this would be the beginning of great changes.
Friday, June 28th 2013 – The sale of the building closes on a Friday afternoon. The stock price continues to trade in its traditional range of $18 to $22. All is quiet before the storm.
Monday, July 1st 2013 – The very first business day after Steinway sold the old building, Kohlberg and Company announces their intention to acquire Steinway for $438 million and make it a privately held company once again.
Kohlberg offers shareholders $35 per share, a 33% premium over the New York Stock Exchange stock trading price! Some voice concern that Kohlberg will cut Steinway up and sell off various parts at a profit.
To be responsible to their shareholders, the Steinway trustees include a 45 day “Shop Around” clause to see if anyone else would be willing to offer better price or terms.
During this “shop around” period, J.S. Kim, owner of a Korean piano maker, makes an offer of $37 per share to acquire Steinway & Sons. Many are concerned that this would result in mass-production and manufacturing moving offshore.
So the bidding war picks up. First $438 million, then $477 million, then $499 million.
In rides the knight in shining armor – New York resident, Mr. John Paulson. Mr. Paulson has children who take piano lessons at Steinway Hall in Manhattan. Mr. Paulson already owns two Steinway pianos and appreciates the hand crafted quality.
His background is one making the right decisions. Several years earlier, Mr. Paulson had recognized that the mortgage bubble could not sustain itself and he invested heavily in that belief. He was correct and his investments earned substantial returns. With his intelligence, values and consistency, he became a multi-billionaire.
But back to Steinway – John Paulson’s advisers tried to dissuade him. You can make better money on several other areas where the return on investment is much greater. But John said, No, this is personal. I want to be a part of the great Steinway Legacy. I want be a good steward for this great company for many years to come. Make no mistake, I don’t plan to lose money, we will be profitable and we will continue to make the very best pianos in the world. Without knowing it, Mr. Paulson was echoing the famous words of Henry E. Steinway from 1853 when he wrote the company mission statement – “Build the best piano possible and sell it at a price consistent with that quality.”
Remember, the mid-October bidding is now up to 499 million dollars. John Paulson makes a bold move and offers $40 per share or $512 million.
Several days go by with no response from the other players, and so the American entrepreneur from New York becomes the new owner of Steinway & Sons. Elation is everywhere – from the factory workers to the office people to the dealer network and especially the lovers of Steinway pianos. Meet Mr. John Paulson here:
This would be a wonderful story even if it ended right there. But it doesn’t – it gets even better. With Mr. Paulson’s involvement, Steinway pianos are getting even better than they were. With investment of many millions of dollars in equipment and the judicious use of technology alongside hand-craftsmanship, everyone agrees that the Steinway pianos are entering a new “Golden Age”.
Piano Teachers, Customers, Piano Tuners, Churches, Colleges and Universities; all are declaring the new Steinway as the best piano that they have EVER made.
That may sound like a tall order, and it is; but come by and audition one for yourself. You will understand why everyone is so enthusiastic about today’s Steinway piano.