Editor's note: Steelcase informed Woodworking Network that the civil lawsuit has been dismissed.

GRAND RAPIDS, Mich. — A Steelcase shareholder is suing the office furniture giant and HNI Corp. just days before its $2.2 billion acquisition by HNI is due to close.

According to M/Live, Dean Drulias, a Steelcase shareholder since 2016, filed a civil suit Nov. 18 to place an injunction preventing Steelcase and its directors from closing the shareholder vote of the sale until there is full disclosure of the “questionable economics,” and “troubling motivations and conflicts of interest” in the sale.

In August, HNI and Steelcase entered into a definitive agreement under which HNI would acquire Steelcase in a cash and stock transaction, with a total value of approximately $2.2 billion to Steelcase common shareholders.

The merger vote is scheduled to take place on Dec. 5. Upon closing, HNI shareholders will own approximately 64% of the combined company, and Steelcase shareholders will own approximately 36%. According to the filing, the deal will have a pro forma annual revenue of approximately $5.8 billion. According to the most recent FDMC 300 ranking of top North American wood products manufacturers, HNI ranks #11 on the listing with annual sales of approximately $1.9 billion. It employs 7,700 workers at its HNI and Kimball International plants in the U.S. and around the world. Steelcase ranks #4 on the list with approximately $2.2 billion in sales and employs 11,300 people at 22 manufacturing and distribution facilities in the U.S. and Mexico.

In his complaint reviewed by M/Live, Drulias alleges that the ageed to price is “unfair, inadequate, and does not accurately reflect Steelcase’s actual value.”

“Based on transactions involving businesses similar to Steelcase, HNI’s financial advisor, JP Morgan, found the company to be worth $29.15 per share (at least $10 more than the aggregate consideration),” the complaint read.

In a follow-up story by M/Live, the news outlet identifies key points from the lawsuit, including:

• Lawsuit alleges significant undervaluation of Steelcase
• CEO accused of cashing out at shareholders’ expense
• Board members face conflict of interest allegations
• Financial advisers’ fees called into question

Two of the most critical allegations points to Steelcase personally benefitting from the deal. For instance, M/Live reports that outgoing President and CEO Sara Armbruster is using the sale to her personal advantage, securing a cash payout of over $24 million and monetizing equity valued at over $44.8 million. 

In addition, the suit claims two Steelcase board members, Timothy Brown and Linda Williams, were promised paid board positions at HNI post-acquisition while sale negotiations were still ongoing. 

Woodworking Network reached out to Steelcase by email for comment. "Steelcase joining HNI creates a more diversified industry leader, combining complementary capabilities to better serve customers. The company remains on track to complete a shareholder vote on December 5 and close the transaction in mid-December."