Updated from 10:02 a.m. ET with closing share prices and additional information throughout

.

NEW YORK (

TheStreet

) -- Famed piano maker

Steinway Musical Instruments

(LVB)

is being bought by private equity firm

Kohlberg & Company

for $35 a share, in a cash deal that values the over 160-year old company at about $438 million.

The deal values Steinway at about the company's pre-recession share price peak and indicates private equity firms are continuing to bet on an economic recovery for the wealthy. Many Steinway grand piano's cost in excess of $50,000.

Steinway's acquisition can also be seen as a bet on a specialized market of professionals and aficionados, another private equity industry trend. Ninety nine percent of all concert pianists chose Steinway pianos in 2007, the company says on its

Web site

.

Kohlberg is offering Steinway shareholders a premium of 33% from the average closing price of the company's shares in the past 90 trading days and it will allow for a 45-day "go shop" period for the piano maker to seek a higher bidder. Steinway's board has unanimously recommended Kohlberg's offer to shareholders.

"For over 160 years, Steinway's skilled manufacturing artisans have been crafting the world's finest musical instruments to perform with unequalled touch and tone," Christopher Anderson, a Kohlberg partner, said in a statement.

The private equity firm said its acquisition would help usher Steinway into a new phase of expansion, without impacting the company's heritage and its manufacturing process.

"Kohlberg's long history of collaboration to grow and expand some of the world's leading consumer brands makes us an ideal partner for Steinway to accelerate its global expansion, while ensuring the artisanal manufacturing processes that make the Company's products unique are preserved, celebrated and treasured."

Steinway shares traded nearly 16% higher to $35.28, above Kohlberg's offer price, in Monday trading. Shares have risen over 65% year-to-date amid a CEO change and the sale of its real estate assets. In March, the company sold a stake in Steinway Hall on West 57th Street in New York City for $46 million.

Steinway & Sons was founded in by Henry Engelhard Steinway and his three sons in 1853 in a Manhattan loft on Varick Street. The company has factories in Hamburg and New York, as well as subsidiaries in Berlin, London, Tokyo, and Shanghai. It crafts approximately 2,500 pianos a year worldwide, Steinway says on its web site.

"Our agreement with Kohlberg represents an exceptional valuation for our shareholders, while also representing an important next step in the growth of Steinway," said Michael Sweeney, chairman and interim CEO of the company.

Korea-based

Samick Musical Instruments

is Steinway's largest shareholder with a 30.25% stake, while hedge fund

ValueAct Capital

is the company's second top shareholder with a 9.56% holding, according to

Bloomberg

compilations of

Securities and Exchange Commission

filings.

The buyout indicates private equity firms remain interested in acquiring premium specialty products and high end retailers, amid a post-crisis recovery in the finances of the wealthy.

Saks Fifth Avenue

(SKS)

another high-end brand is reported to be a target of private equity suitors.

The company's products also include Boston and Essex pianos, Selmer Paris saxophones, Bach Stradivarius trumpets, C.G. Conn French horns, King trombones, and Ludwig snare drums.

In 2012, Steinway revenues grew to $353 million, while its earnings rose to over $13 million. In mid-June, the company said it would redeem $68 million in its outstanding debt.

Boutique investment bank Allen & Company is serving as financial adviser to Steinway in its buyout. Skadden, Arps, Slate, Meagher & Flom and Gibson, Dunn & Crutcher are acting as legal advisors to Steinway, while Ropes & Gray LLP is acting as Kohlberg's legal adviser.

-- Written by Antoine Gara in New York.

Follow @antoinegara