News Summary
HNI Corp. has finalized a $2.2 billion acquisition of Steelcase Inc., reshaping the corporate landscape in Grand Rapids, Michigan. As part of the deal, Steelcase shareholders will receive cash and HNI stock, while the new entity is expected to generate significant synergies and a projected revenue of $5.8 billion. Concerns arise about potential job losses as corporate functions shift to Iowa, sparking discussions about the impact on the local job market amid ongoing consolidation in the office furniture sector.
Grand Rapids, Michigan – HNI Corp., an Iowa-based company, has finalized a cash and stock acquisition of Steelcase Inc. in a deal valued at $2.2 billion. This merger, announced on Monday, is poised to significantly alter the corporate landscape of Michigan, particularly in Grand Rapids where Steelcase has been a historical business presence for over a century.
Steelcase, which has a storied history dating back 113 years, initially gained prominence for producing fireproof metal safes and filing cabinets. Today, the company is known for its innovative office furniture solutions and employs approximately 2,000 staff in Grand Rapids. Under the terms of the merger, HNI Corp. will control about 64% of the shares in the newly formed entity, with Steelcase shareholders retaining around 34%. As part of this agreement, Steelcase shareholders will receive $7.20 in cash and 0.2191 shares of HNI common stock, effectively valuing Steelcase shares at approximately $18.30.
Following the announcement of the merger, Steelcase’s stock price surged by nearly 63%, reaching $16.58, while HNI’s shares experienced a decline of 5.3%, settling at $45.36. The leadership of the new company will come under the guidance of Jeffrey Lorenger, HNI’s chairman and CEO, who will operate from the company’s headquarters in Muscatine, Iowa.
While Steelcase’s headquarters will remain in Grand Rapids for the immediate future, it is anticipated that many corporate functions will gradually shift to Iowa over subsequent years. This merger is taking place amidst a trend of consolidation within the office furniture sector, a change spurred by the evolving work environments in the wake of the COVID-19 pandemic.
The combined companies project annual run-rate synergies of $120 million. Steelcase reported $3.2 billion in sales over the past fiscal year, with a net income of $13.6 million in the latest quarter, while HNI generated $2.6 billion in annual sales, posting a second-quarter net income of $48.3 million.
This acquisition has emerged in the context of several recent notable mergers in Michigan, including Ferrero’s acquisition of WK Kellogg Co. for $3.1 billion. However, there are growing concerns regarding potential job losses, as corporate mergers often lead to overlapping roles being consolidated.
Concerns have been raised by experts about the impact of this merger on Michigan’s job market. As functions transfer to Iowa, it signifies a shift of corporate power away from Michigan. Grand Rapids has, however, gained recognition as an emerging market that attracts younger, educated talent and is seen as a promising investment hub.
Steelcase and HNI are both known for their diverse product ranges, with Steelcase targeting high-end global clients while HNI services the mid-tier market. Each organization faces challenges related to tariffs and a fluctuating trade environment that complicate the procurement of materials and finished products.
Post-merger, HNI’s board will expand from 10 to 12 members, integrating two independent board members from Steelcase. Historically, HNI’s acquisition strategy, including their earlier acquisition of Kimball International, has been labeled as relatively seamless, adding to the optimism around the integration process.
With the merger, the projected annual revenue for the combined entity is expected to reach approximately $5.8 billion. Steelcase, which operates in 80 countries and maintains a network of 15 manufacturing sites globally, has long been regarded for its pioneering efforts in office design and innovation since the early 20th century. This acquisition heralds a new chapter in the corporate history of both firms and the city of Grand Rapids.
Deeper Dive: News & Info About This Topic
- WZZM13
- Wikipedia: Steelcase
- Detroit Free Press
- Google Search: HNI Corporation acquisition Steelcase
- Crain’s Grand Rapids
- Encyclopedia Britannica: Office Furniture
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- Google News: Steelcase HNI merger
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- Google Scholar: Office Furniture Industry Mergers