GRAND RAPIDS, Mich. - Steelcase Inc. has signed a definitive agreement to acquire Smith System Manufacturing Co., a provider of preK-12 education furniture, for $145 million plus an adjustment for working capital.
Announced June 8, the transaction is expected to be completed during the second quarter of fiscal 2019, subject to customary closing conditions and regulatory approvals.
The acquisition expands the contract furniture giant's range of solutions for the office, healthcare and education markets.
“As education markets continue to grow, the combination of Steelcase and Smith System will create incredible value for our customers,” said Allan Smith, vice president of Global Marketing at Steelcase. “Together, we can help schools create outstanding learning environments where students thrive, such as collaboration spaces, makerspaces and tech labs.”
Smith System will operate as an independent subsidiary under its own brand. The company generated revenue of approximately $82 million over the past 12 months, and has increased its revenue at a compounded annual growth rate of approximately 25 percent over the past three years, according to SEC filings. Approximately two-thirds of its revenue is realized during the summer months.
Founded in 1905 and based in Plano, Texas, Smith System provides school chairs, student and teacher desks, tables, book carts and flexible seating for the school environment.
“We believe that joining forces with Steelcase offers us a path to accelerate long-term growth, while maintaining the agility that has made us successful,” said Molly Parnell, vice president of sales at Smith System. “Steelcase and Smith System have complementary offerings and we look forward to growing our business together in preK-12, higher education, and corporate learning environments around the globe.”
Smith said Steelcase looks to double Smith System’s business within five years by expanding sales in North America through the Steelcase dealer network, as well as bringing Smith System’s products to corporate customers and global markets. Smith Systems will also continue to support its existing network of dealers.
Steelcase said it intends to fund the acquisition through a combination of domestic cash on hand and borrowings under its credit facility. The company said it expects the acquisition to be modestly accretive in fiscal 2019 and more significantly thereafter.
News of the acquisition comes just two days after Steelcase announced its partnership with West Elm, a provider of workplace solutions.
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