MUSCATINE, Iowa & JASPER, Ind. — HNI Corp. announced it has entered into a definitive agreement to acquire all the outstanding shares of Kimball International in a cash and stock transaction valued at approximately $485 million.

Announced March 8, the transaction has been unanimously approved by the Boards of Directors of both companies and is expected to close by mid-2023, subject to the approval of Kimball International shareholders, the receipt of required regulatory approval, and the satisfaction of other customary closing conditions.

Under the terms of the agreement between the two giant furniture manufacturers, Kimball International shareholders will receive $9.00 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, the statement said, Kimball International shareholders will own approximately 10 percent 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. 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,” said Jeff Lorenger, HNI’s chairman, president, and chief executive officer.

As with 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. In addition, both companies have strong brand positions and complementary product portfolios.

HNI and Kimball are ranked 14 and 23 respectively in the current FDMC 300 list of North America's largest wood products producers, based on 2022 sales.

A combined HNI and Kimball International will have a broader, more comprehensive product offering, tailored go-to-market strategies, and enhanced manufacturing capabilities, the statement noted. 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.

Kristie Juster, Kimball International’s chief executive oficer, said, “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. 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. We are confident that combining with HNI represents the ideal fit for our family of brands and will deliver enhanced value to all stakeholders.”

Following the close of the transaction, the combined company will continue to be led by Lorenger. Juster will remain in her current role with Kimball International until the closing to ensure a seamless transition.

Financial profile
The combined company will have pro forma annual revenue of approximately $3.1 billion and pro forma adjusted EBITDA of approximately $290 million, inclusive of annual run-rate synergies, based on each company’s respective last reported 12 months. 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 March 7, 2023, the last day prior to the announcement, the total implied per share consideration equals $12.90, representing a premium on Kimball International’s 30-day VWAP of 81%. The consideration implies a valuation multiple of approximately 6.8x calendar year 2022 adjusted EBITDA, inclusive of synergies.

Rothschild & Co is serving as financial advisor to HNI, and Davis Polk & Wardwell LLP is serving as legal counsel. J.P. Morgan Securities LLC is serving as financial advisor to Kimball International, and ArentFox Schiff LLP is serving as legal counsel.

Headquartered in Muscatine, Iowa, HNI Corp. (NYSE: HNI) manufactures workplace furnishings and residential building products, operating under two segments. The Workplace Furnishings segment is a leading global designer and provider of commercial furnishings under the brands: HON, Allsteel, Gunlocke, HBF, Design Public, Danish Design Store, HBF Textiles, OFM, Respawn, HNI India and HNI Global. The company says its Residential Building Products segment is the nation's leading manufacturer and marketer of hearth products, which include a full array of gas, electric, wood, and pellet-burning fireplaces, inserts, stoves, facings, and accessories.

Based in Jasper, Indiana, Kimball International  (NASDAQ: KBAL) is a leading omnichannel commercial furnishings company with expertise in the Workplace, Health, and Hospitality segments. Its family of brands includes Kimball, National, Etc., Interwoven, Kimball Hospitality, D’style and Poppin.