In this Oct. 31, 2011 photo, an 1877 Steinway grand piano used by Motown artists is seen in a Motown recording studio in Detroit.
David Coates, Associated Press
Notes of sorrow in changes at Steinway
- Article by: JAMES BARRON
- New York Times
- July 13, 2013 - 9:35 PM
NEW YORK - First, Steinway & Sons closed on the sale of its Beaux-Arts Manhattan building on West 57th Street, where the likes of Sergei Rachmaninoff and Vladimir Horowitz once practiced. Three days later, it announced that it was planning to sell the whole company to a private-equity firm that owns more than 15 other medium-size manufacturers, making everything from windshield wipers to sewing machines to coffins.
For pianists who obsess about all things Steinway - is a brand-new Steinway as good as one from the 1920s, and are those made in Germany preferable to those made in New York? - the developments had the force of a one-two punch. Pianists cherish memories of the first time they set foot in the building and its famous basement, where generations of professional pianists have chosen the Steinways they played at concerts and recording sessions.
They also worry that new owners could meddle with Steinway's time-honored and time-consuming manufacturing methods. Steinway spends almost a year building each grand piano, and pianists fret that an assembly line speedup at the company's two factories would spoil what they prize: the delicacy of a Steinway's touch, the colorations of its sound.
"There's concern any time there's a shift," pianist Gary Graffman said. "There's no way of my knowing: Will they take as much care with each piano as they have in the past?"
It is a question that has reverberated through the music world since the $438 million deal for the company was announced last week. The offer, which came from the private equity firm Kohlberg & Co., would take Steinway private. It has been traded under the stock symbol LVB, for Ludwig van Beethoven, since Steinway went public in 1996.
Steinway is now 13 days into a 45-day "go-shop" period, during which it can consider other bids, and at least one portfolio manager whose firm has a stake in Steinway has said the price is too low. Shares of Steinway closed at $36.18 Friday, $1.18 above Kohlberg's $35-a-share offer.
Kohlberg is "not contemplating any changes to any of the manufacturing operations," said a Kohlberg investment partner, Christopher W. Anderson, adding that there had been no discussion of closing or moving the factories in Astoria, Queens, and Hamburg, Germany. He would not comment on whether Steinway's top management would remain after the takeover. (Kohlberg's chairman, James A. Kohlberg, has been a director of The New York Times Co. since 2008.)
Beyond the balance sheet, Anderson, 38, has an interest in the company's products. "I grew up playing on a Steinway," he said in an interview this week: an upright that once belonged to his great-grandmother. And Friday he posted a letter online to Steinway's dealers in which he said that one of Kohlberg's "main goals for Steinway" was to "preserve and support everything that makes a Steinway piano special." He also said that, by going private, Steinway would be "free from the short-term financial constraints of publicly traded companies" and would have more latitude to "plan and invest with a long-term perspective."
The deal would give Steinway its fifth set of owners. In 1972, the Steinway family - descendants of the immigrant instrument maker who started the company in 1853 - sold it to CBS. That marriage eventually soured, and in the 1980s Steinway was sold to an investment group from Boston. Steinway changed hands again in the 1990s, when it was bought by what was then Selmer Industries, a band-instrument manufacturer with plants in the Midwest and South. The combined company was led by two investment bankers who had controlled Selmer, Kyle R. Kirkland and Dana D. Messina.
Messina served as chief executive until 2011, stepping down after he and John M. Stoner Jr., the president of the band-instrument division, made a bid to buy everything but the company's piano operations. Steinway began a review of strategic alternatives that ended in December, when it turned down the Stoner-Messina offer and said the company was not for sale. Then came the overture from Kohlberg.
Under Messina's replacement - Michael T. Sweeney, a former president of Starbucks in Britain who is chairman of the holding company for The Minneapolis Star-Tribune - Steinway's financial picture brightened. The company posted a profit of $2.7 million in the first quarter of 2013, up from $590,000 in the first quarter of 2012. Piano sales rose 2.9 percent worldwide.
To keep pace with orders in Europe and Asia, Steinway has increased its workforce by almost 20 percent in the last year at the Hamburg plant, and Sweeney said that leaving either New York or Hamburg "would be pushing the self-destruct button for an investor."
He said the building on 57th Street was another matter. He called it old and forbidding - it opened in 1925 down the block and across the street from Carnegie Hall - and a financial burden. Steinway is shopping for space in Manhattan, convenient to Carnegie Hall and Lincoln Center, and Sweeney said he wanted a showroom where the pianos would look like "sculptural objects," along with a recital hall and practice rooms.
Steinway must vacate the 57th Street space by the end of next year, and many pianists are sorry it is leaving. "I'm sure I'm with everybody else on this, that it's a shame that building will no longer be Steinway Hall," pianist Emanuel Ax said. "One of the two times that I met Horowitz for five seconds was when they did a celebration in that building after his 1965 return" to performing, at Carnegie Hall. "That was very, very meaningful."
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