Steinway Musical Instruments Inc., the legendary piano maker controlled by U.S. hedge fund billionaire John Paulson, has attracted takeover interest from China Poly Group Corp., people familiar with the matter said.
The state-owned conglomerate is holding preliminary talks about a purchase of Steinway, according to one of the people, who asked not to be identified because the deliberations are private. The company, whose iconic pianos have been used by virtuosos such as Lang Lang, could fetch about $1 billion in a sale, the people said.
Poly Group is doing due diligence work on Steinway as well as seeking financing and government approvals for an offer, the people said. The piano maker has also attracted other potential buyers such as private-equity firms and companies, the people said.
Steinway should be able to fetch a high valuation given that the company may reach 30 percent to 40 percent annual sales growth in China, according to Shaun Rein, founder and managing director of the China Market Research Group. A Chinese company like Poly Group could help improve Steinway’s distribution network in the country, which has been weak so far, he said.