Hedge Funds

Steinway & Sons CEO out three years after billionaire John Paulson purchase

Ron Losby, CEO of Steinway & Sons and company's owner, John Paulson
Amanda Gordon | Bloomberg | Getty Images

"C" you later.

The head of iconic piano maker Steinway & Sons is out at the New York-based company, three years after he helped entice billionaire hedge-fund manager John Paulson into buying the firm for more than $500 million.

Steinway CEO Michael Sweeney's departure last week came four months after the 163-year-old company opened a lavish, and expensive, new Steinway Hall retail and performance space in Midtown Manhattan, which was designed by renowned high-end architect Annabelle Selldorf.

In addition to that 19,000-square-foot space Steinway also said this past spring it was leasing an additional 20,000 square-feet of space in the same building on Sixth Avenue to serve as the company's global headquarters.

A Steinway spokesman would not say if Sweeney, 58, resigned or was forced out of the company, or reveal what led to him leaving.

Michael Sweeney
Source: Steinway Pianos

"Correct," said the spokesman, Stephen Millikin, when asked if Sweeney was no longer CEO at Steinway. "That was last week."

"That is, unfortunately, all I can say on the matter," Millikin said.

He did say, however, that Steinway's president, Ron Losby, had taken over as CEO from Sweeney.

Losby, 61, has been Steinway president since 2008, having joined the company as Midwest district manager in 1998.

A spokesman for Paulson, who took Steinway private after he bought it, said he had no comment on Sweeney or any other executive moves at the company.

Sweeney, who had previously been president of Starbucks Coffee UK and chairman of the Star Tribune Media Company, did not respond to requests for comment.

Amy T. Zielinski | Redferns | Getty Images

Steinway pianos are coveted by piano-cognoscenti and command prices of tens of thousands of dollars. The company's pianos, which can take nearly a year to make by hand, have been the preferred choice of composers and performers such as Sergei Rachmaninoff, Gustav Mahler, Vladimir Horowitz, Billy Joel, Lang Lang and Harry Connick Jr.

In 2013, Paulson told CNBC that "I grew up in a family of piano players," including his two sisters, who "asked my dad to buy a Steinway."

"My father did his shopping and at the end of the day it was not something we could afford," said Paulson. He added that one of his sister's wept when their dad brought home a baby grand piano and she realized it wasn't a Steinway.

But Paulson, who made billions of dollars shorting the U.S. housing market in 2008, could more than afford a Steinway, and also could afford the entire company by 2013.

Paulson emerged as Steinway's buyer in September of that year after the then-publicly traded company negotiated a tentative sale agreement to buyout firm Kohlberg & Co. for $35 per share, or $438 million. Steinway's bankers, on the heels of that agreement, conducted a go-shop period that allowed other would-be suitors a chance at topping Kohlberg's offer.

Paulson & Co. did just that, with a final offer of $40 per share, or $512 million.

Soon after the sale, Paulson said he viewed Steinway as "an investment," that he expected to increase in value over time.

"They are the epitome of high culture and value," Paulson told CNBC. He added, "I don't think anyone should worry about the new owner."

"When you have something that is perfect, that occupies a position and sector unrivaled, by anyone else, that's one thing we do not want to tamper with."

Sweeney at the time told CNBC that, "We were delighted that John was the ultimate buyer of Steinway."

"Steinway now has a steward who understands and cares passionately about our mission," Sweeney told "Power Lunch."

"Well, I hope John will be involved," Sweeney said when asked about Paulson's level of involvement in day-to-day operations at Steinway. "But he does have a management team here at Steinway that's been intact for quite some time and we're making good progress in the business."