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The resurgent housing market is the key to success for venerable piano brand Steinway.
That’s the view of hedge fund billionaire John Paulson, who yesterday agreed to pay $512 million to take the 160-year-old maker of musical instruments private.
Paulson & Co.’s $40-a-share bid topped rival offers from private-equity firm Kohlberg & Co. and Samick Musical Instruments, Steinway’s largest shareholder.
The Post first reported that Paulson was in talks to buy the Waltham, Mass., company, whose ticker symbol is “LVB” for Ludwig van Beethoven.
Sources close to Paulson — who made billions betting on the subprime mortgage meltdown — believes Steinway is a way to capitalize on the housing recovery, according to two sources familiar with his thinking.
In short, new homes mean more piano purchases to help furnish them.
Paulson, speaking at an industry conference in July, played up the housing recovery.
“I think we’re just at the beginning of the recovery,” he said. “I think it will continue for four to seven years. It’s not too late to get involved.”
Paulson & Co. has reportedly been buying undeveloped land in Arizona, California, Florida and Nevada.
Similarly, Paulson believes Steinway will benefit from growing wealth and rising demand in countries such as Brazil, Russia, India and China, one source said.
A Paulson & Co. spokesman declined comment.
Steinway Wednesday closed up 7.9 percent to $41.29. That is a slightly higher price than what it was trading at during most of the 2005-08 housing rush.
In 2009, during the depths of the downturn, Steinway fell below $10 a share.
Rival bidder Samick said in a regulatory filing yesterday that it bid $39 a share and has spoken to Steinway about what it would take for it to accept a new higher offer.
The Korean suitor did not indicate whether it would make a new proposal to top Paulson’s.