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Herman Miller acquires minority stake in Danish furniture company COURTESY PHOTO

Herman Miller acquires minority stake in Danish furniture company

BY Thursday, June 07, 2018 10:11am

ZEELAND — In the second investment announced in as many days, Herman Miller Inc. acquired a minority stake in a Danish furniture maker.

Under the deal announced today, the Zeeland-based Herman Miller (Nasdaq: MLHR) invested $66 million for a 33-percent equity interest in Nine United Denmark A/S that produces the HAY furniture brand. The deal provides Herman Miller with the right to increase its ownership over time. Herman Miller also acquired the rights to the HAY brand in North America for $5 million.

Herman Miller a day earlier announced the acquisition of a 48-percent equity stake in Harderwijk, Netherlands-based Maars Living Walls for $6 million.

Today’s move with HAY — which offers 180 styles of furniture and more than 350 accessories sold in more than 50 countries — gives Herman Miller “a key building block” and product line to scale its consumer business.

“HAY is one of the best articulated design brands in the furnishings space,” Herman Miller President and CEO Brian Walker said in a statement. “The HAY assortment will significantly expand our offer to a younger, more urban demographic that we have targeted for expansion.

“With more workplaces and commercial spaces adopting a residential feel, the opportunity to offer quality designs at an attainable price point is only expanding. Adding HAY’s considerable stable of products to our ancillary offer further cements Herman Miller’s ability to deliver excellent design to customers regardless of budget or what kind of space they’re outfitting.”

HAY, which has recorded a 14 percent four-year compounded annual growth rate, projects revenues of $155 million in the 2018 fiscal year that ends in July.

Rolf Hay, who co-founded HAY in Copenhagen in 2002, called Herman Miller the “perfect partner” to expand the brand in North America.

Herman Miller intends to form an online store by December and open four HAY retail locations in North America, a market that now accounts for just 4 percent of HAY’s revenue. The company also will integrate HAY products into its North American and international furniture dealers.

Herman Miller expects the equity investment to generate 2 cents to 4 cents per share in accretive earnings in the first year, and 13 cents to 15 cents per share by the fifth year, presuming its ownership remains at 33 percent.

The North American licensing rights to the HAY brand should break even in the first year, and generate $75 million to $100 million in revenue by the fifth year with estimated accretive earnings of 11 cents to 14 cents per share.

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