Grand piano maker Steinway Musical Instruments has agreed to be bought by private equity group Kohlberg & Co in a $438 million cash deal for the 160-year-old company. Kohlberg offered $35 a share, Steinway said on Monday, a premium of 15 per cent to Friday's closing price of $30.43.

The deal is the latest indication of the bets private equity groups are making in the luxury goods sector as they seek to profit from the recovering finances of the wealthy. Steinway sells pianos for as much as $218,000.

Massachusetts- based Steinway had said previously that it was considering a sale of the company. The agreement provides for a 45-day period during which Steinway can solicit rival offers.