Herman Miller announced Monday that it has reached an agreement to acquire Knoll in a cash-and-stock deal valued at $1.8 billion. The deal is expected to close by the end of the third quarter of 2021.
With both brands known for their iconic offerings in office and contract furniture, the timing of the move is meant to dovetail with a worldwide return to the office post-pandemic. “As distributed working models become the new normal for companies, businesses are reimagining the office to foster collaboration, culture, and focused work while supporting a growing remote employee base,” said Andi Owen, president and CEO of Herman Miller, in a statement announcing the news. “With a broad portfolio, global footprint and advanced digital capabilities, we will be poised to meet our customers everywhere they live and work.”
In the press release, the acquisition is positioned as a combining of the two companies rather than a takeover. Though it is unclear to what extent Herman Miller intends to merge the two companies’ operations, it predicts that the acquisition will generate $100 million of run-rate cost synergies within two years—a savings it expects to find in administrative costs, as well as supply chain, procurement and logistics efficiencies.
While Owen will remain at the helm of the combined company, longtime Knoll chairman and CEO Andrew Cogan will depart following the completion of the transaction. “This combination validates the strategic direction and our success in building a preeminent constellation of design-driven brands and leaders, and is a testament to the achievements of the entire Knoll team in bringing a contemporary perspective to how we work and live,” he said in the statement. “We believe this combination offers significant benefits to our shareholders, clients, dealers and associates. Our shareholders will receive immediate and certain value, as well as future upside potential through ownership in an industry leader with significant growth opportunities. Our clients, the design community and dealers will have access to an expanded, exceptional portfolio of brands through enhanced channels. And our associates will benefit as part of a larger and more diversified company with a shared design legacy.”
Under the terms of the agreement, Knoll shareholders will receive $11 in cash and 0.32 shares of Herman Miller common stock for each share of Knoll common stock they own. Upon completion of the transaction, Herman Miller shareholders will own approximately 78 percent of the combined company and Knoll shareholders will own about 22 percent. In premarket trading, Knoll shares soared 28 percent after the announcement, while Herman Miller shares slid 12 percent.
The companies collectively have 19 leading brands—including Herman Miller’s Design Within Reach, Hay and Maharam, and Knoll’s Holly Hunt and Edelman Leather—with a presence across more than 100 countries worldwide, including 64 showrooms, more than 50 physical retail locations, and global multichannel e-commerce capabilities. The combined entity is anticipated to have an annual revenue of around $3.6 billion.
Homepage photo: The Herman Miller concept store in New York’s Hudson Yards | Courtesy of Herman Miller