Steinway agrees $512m private sale to hedge fund

Sviatoslav Richter and Steinway piano
Image caption Steinway's pianos are used by famous pianists, including Sviatoslav Richter, pictured here

Steinway Musical Instruments, the US company famous for its grand pianos, has agreed a buyout deal with hedge fund firm Paulson & Co.

The deal values the firm at $512m (£330m) and trumps an earlier offer made by rival firm Kohlberg & Co.

Steinway still has 25 days to accept better offers, but Kohlberg has already said it will not bid again.

The 160-year-old firm piano maker has struggled to maintain its profit margins in recent years.

Shares rose 6% to $40.51, close to the offer price.

Steinway's sales grew just 2% last year.

It sells a selection of brass and other instruments alongside its range of pianos.

It has been looking for a buyer since December 2012, after concluding a 17-month strategic review.

The purchase is seen as an unusual move for John Paulson, who heads the Paulson & Co fund.

He rose to prominence in the financial world in the wake of the crisis in 2007 when he bet against the subprime mortgage investments at its centre.

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