Published in Manufacturing
Herman Miller president and CEO Andi Owen Herman Miller president and CEO Andi Owen COURTESY PHOTO BY MITCH RANGER

Herman Miller to acquire competitor Knoll for $1.8 billion

BY Monday, April 19, 2021 11:15am

ZEELAND — Herman Miller Inc. plans to buy competitor Knoll Inc. in a $1.8 billion cash-and-stock deal that will create a new office furniture industry sales leader.

Combining the two office furniture industry icons will create “the preeminent leader in modern design, catalyzing the transformation of the home and office sectors at a time of unprecedented disruption,” according to an announcement this morning on the deal. The deal is expected to close in the third quarter, pending shareholder and regulatory approvals.

Zeeland-based Herman Miller (Nasdaq: MLHR) and East Greenville, Pa.-based Knoll (NYSE: KNL) together have 19 brands, a presence across more than 100 countries, a global dealer network with 64 showrooms globally, more than 50 physical retail locations, and global multi-channel e-commerce networks. The two companies combined will have $3.6 billion in revenue and $552 million in adjusted pro-forma earnings before interest, taxes, depreciation, and amortization (EBITDA).

By comparison, Grand Rapids-based office furniture industry leader Steelcase Inc. — whose CEO James Keane today announced he plans to retire in October — last month reported $2.59 billion in revenue for the 2021 fiscal year that ended Feb. 28. The revenue was a 30-percent reduction from the prior fiscal year that resulted from the effects of the COVID-19 pandemic on the industry.

“This transaction brings together two pioneering icons of design with strong businesses, attractive portfolios and long histories of innovation,” Herman Miller President and CEO Andi Owen said in a statement. “As distributed working models become the new normal for companies, businesses are reimagining the office to foster collaboration, culture and focused work, while supporting a growing remote employee base. At the same time, consumers are making significant investments in their homes. With a broad portfolio, global footprint and advanced digital capabilities, we will be poised to meet our customers everywhere they live and work. Together, we will offer a deep portfolio of brands, technology, talent and innovation, to create meaningful growth opportunities in all areas of the combined business.”

Owen will serve as president and CEO of the merged company. Knoll Chairman and CEO Andrew Cogan will depart after 30 years with the company.

In a conference call this morning with industry analysts, Owen called the deal a “very historic moment” that comes as the office furniture industry navigates the fallout of the COVID-19 pandemic that has brought remote work into the mainstream.

The merger “is not only the right fit” between the two companies, “it’s also the right time,” Owen said.

“We believe this union will shape the future of our industry as a whole,” she said. “The changes we’ve faced over the past year have set in motion powerful trends that are shaping our world and our lives. The rise of distributed work models, a greater focus on the home, digital acceleration, the rise of direct-to-consumer business models, and a focus on sustainability and social good. Bringing Herman Miller and Knoll together, we will catalyze the home and office sectors at a time unprecedented disruption.”

Under terms of the merger, Knoll shareholders will get $11 in cash and 0.32 shares of Herman Miller common stock for each of their shares. Herman Miller also will buy outstanding shares of Knoll’s preferred stock from investor Investindustrial VII L.P. for $253 million in cash, or $25.06 per share. Investindustrial VII L.P. agreed to vote its shares in favor of the deal.

Herman Miller intends to finance the deal with cash on hand and new debt. The company has secured a $1.75 billion commitment for senior debt from Goldman Sachs.

Goldman Sachs & Co. LLC serves as financial adviser to Herman Miller and Wachtell, Lipton, Rosen & Katz as legal adviser. BofA Securities serves as financial adviser to Knoll and Sullivan & Cromwell is serving as legal adviser.

Read 4953 times Last modified on Monday, 19 April 2021 11:22