MUSCATINE, Iowa – HNI Corporation and Kimball International, Inc. announced in a joint news release today, March 8, that HNI will acquire all the outstanding shares of Kimball International in a $485 million transaction.
The companies announced they have entered into a definitive agreement for the Muscatine-based HNI to acquire the Jasper, Indiana-based Kimball (NASDAQ: KBAL).
Under the terms of the agreement, Kimball shareholders will receive $9 in cash and 0.1301 shares of HNI common stock for each share of Kimball International common stock they own. As a result of the transaction, Kimball International shareholders will own about 10% of the combined company.
“We are excited about joining with Kimball International, a high-quality company we have long admired for its recognized brands, furnishings expertise built over 70 years, and established relationships across multiple sectors,” Jeff Lorenger, HNI’s chairman, president and CEO said in a news release. “The combined company will have a stronger platform for growth, delivering significant benefits for our shareholders, members, dealers, and customers. We look forward to welcoming the talented Kimball International employees to HNI.”
Kimball International is a commercial furnishings company with a well-established family of brands and extensive expertise in the workplace, health, and hospitality segments. HNI and Kimball International share similar cultures and values with a commitment to customer service and operational excellence, the release said. In addition, both have strong brand positions and complementary product portfolios.
Kimball’s family of brands includes Kimball, National, Etc., Interwoven, Kimball Hospitality, D’style and Poppin.
According to the companies, a combined HNI and Kimball International will have a broader, more comprehensive product offering, tailored go-to-market strategies, and enhanced manufacturing capabilities. Kimball International’s strong presence in secondary geographic areas and expertise in ancillary products will enable the combined company to better benefit from post-pandemic trends in the fastest growing markets.
“I’m incredibly proud of what we have built at Kimball International, and this agreement is a testament to our team’s commitment and dedication,” Kristie Juster, Kimball International’s Chief Executive Officer said in the release.
“Joining HNI is an important next step in our company’s history and will provide our employees with more opportunities for career growth and development as part of a larger, more diversified industry leader that also shares our deeply rooted values,” she added. “We are confident that combining with HNI represents the ideal fit for our family of brands and will deliver enhanced value to all stakeholders.”
When the transaction is closed, the combined company will continue to be led by Mr. Lorenger. Ms. Juster will remain in her current role with Kimball International until the closing to ensure a seamless transition.
The combination is expected to generate $25 million of annual run-rate cost synergies within three years of closing.
Based on HNI’s closing share price as of Tuesday, March 7, the total implied per share consideration equals $12.90, representing a premium on Kimball International’s 30-day VWAP of 81%, according to the release. The consideration implies a valuation multiple of approximately 6.8x calendar year 2022 adjusted EBITDA, inclusive of synergies.
As of 10 a.m. today, HNI’s stock was down $3.06 (-10.22%) to $26.88 in trading on the NYSE.
The transaction has been unanimously approved by the two companies’ boards of directors and is expected to close by mid-2023. It is subject to the approval of Kimball International shareholders, required regulatory approvals, and other customary closing Rothschild & Co is the financial advisor to HNI, and Davis Polk & Wardwell LLP is legal counsel. J.P. Morgan Securities LLC is financial advisor to Kimball International, and ArentFox Schiff LLP is legal counsel.
HNI has been improving where people live, work, and gather for more than 75 years. The Muscatine manufacturer produces workplace furnishings and residential building products, operating under two segments.
Kimball International is a leading omnichannel commercial furnishings company with deep expertise in the Workplace, Health, and Hospitality segments. For more than 70 years, its brands have seized opportunities to customize solutions into personalized experiences, turning ordinary spaces into meaningful places.
