HNI Acquires Kimball International

HNI Corp. announced Wednesday that it was acquiring Kimball International, creating one of the industry’s largest companies and one that HNI Chairman, President and CEO Jeff Lorenger said will be “stronger together.”

The combined company will leapfrog Haworth (and potentially Steelcase) to become the second or third largest company in the industry when the deal is expected to close by the middle of the year. HNI said combined sales are expected to be $3.1 billion — the same number Wall Street analysts expect Steelcase to post for its fiscal year 2024. The combined MillerKnoll remains the largest.

The announcement of the $485 million deal that was a combination of cash and shares of HNI stock sent shockwaves through the industry, which until recent years has experienced scant few blockbuster deals.

Under the terms of the agreement, Kimball International shareholders will receive $9 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, Kimball International shareholders will own approximately 10% of the combined company.

It is too early to tell exactly what ramifications the deal will have on the industry, but much of the post-announcement focus was on the distribution channels fit and how the other majors will respond to a combined HNI and Kimball, especially when it comes to dealer channels. Kimball has always been an open line, but has enjoyed success, including with many dealers aligned with Steelcase. How, or if, that will continue in the future remains to be seen.

During a conference call with investors and analysts, Lorenger said the portfolios are very complimentary to each. He said HNI has brands that are open lines as well and said the two companies share similar approaches with some of its brands.

HNI brands like HON are expected to compliment Kimball International’s brands as the two companies complete a merger.

“Just given the nature, candidly, of the portfolios, they bring some strength to us and we bring some strength to them and we’re well positioned also for the post-pandemic trends with the products and the secondary geography. So, when you net that all together, we like the coverage model and we like the product portfolio,” he said.

Lorenger said it was a “pretty clean deal” in terms of dealer overlap. “They have some dealers in some markets where we have some dealers, but by and large they’re in some places that that we probably need some help in and vice versa,” he said.


Kimball brings an extensive product range to the HNI overall offering.

Marshall Bridges, HNI’s senior vice president and chief financial officer said both HNI and Kimball sell broadly and that a “meaningful amount of revenue” is flowing through all kinds of distribution, including competitively aligned distribution. Kimball has a strong presence in secondary geographic areas and expertise in ancillary products, which will enable the combined company to better benefit in the fastest growing markets, according to HNI. “I think our view is that we’ve established positions in that broad set of distribution because we’re offering up compelling value to the customers and we (believe) the customer gets to decide these things and we view that as something that should stay that way,” he said.

Analysts repeatedly asked about distribution during the call. One analyst asked if the open line strategy Kimball has will remain in place and if HNI brands would be “run through that pipeline” as well as conversely, whether some of Kimball’s ancillary furniture would be sold through HNI aligned dealers. Lorenger answered: “I think that will remain in place and I think all of those are distinct possibilities.”

If the Herman Miller and Knoll deal is any indication, the dealer issues will take some time to sort out, but Lorenger said Kimball was a good fit both in terms of the business and the culture.

He outlined five key points behind the acquisition:

  1. As a combined company, he said HNI and Kimball will be able to deliver more value to customers and dealers through a broader, more comprehensive product offering, a tailored go to market strategy utilizing the strong brand positions of both HNI and Kimball International and enhanced manufacturing capabilities, which will support customer service levels and drive efficiency.
  2. The combination will better position HNI to take advantage of attractive dynamics in ancillary products, which is an area of strength for Kimball International. With return to office activity increasing, he said customers are becoming more comfortable with defining their own unique hybrid work strategies, which emphasize a more collaborative work environment as it relates to office location, size, and layout. These post pandemic layouts increasingly use ancillary products to support flexibility, collaboration, and privacy. Together HNI and Kimball International will have a leading suite of ancillary products, he said.
  3. Kimball International’s strong presence in the secondary geographies will enable HNI to benefit from post-pandemic trends, specifically, secondary and tertiary geographies have benefited from population migration patterns and elevated return to office dynamics.
  4. The companies fit very well together, he said, and have similar cultures and values, including a strong commitment to customer service and operational excellence. He said both cultures are focused on respect, integrity, and community engagement, and both work to make a difference in the lives of their people, customers, communities and the environment.
  5. The transaction will deliver attractive financial benefits including annualized cost synergies of $25 million and significant additional opportunities to accelerate growth through more resilient and diverse revenue streams.

    Kimball adds a significant position in healthcare to the combined companies.

It is the combination of two massive companies in the industry. Kimball has been in business for more than 70 years and has an extensive manufacturing footprint across eight locations. In calendar year 2022, Kimball had sales of $719 million.

Kimball CEO Kristie Juster said the leadership team believes the sale to HNI is the right move for its shareholders, customers, business, and people.

“Our shareholders will realize significant and immediate value, as well as the ability to participate in the ongoing upside of a stronger combined company, and our employees will have more opportunities for career growth and development as part of a larger, more diversified industry leader — one with similar values to ours,” she said. “I am incredibly proud of what we have built at Kimball International and what we have been able to accomplish because of our team’s commitment and dedication. We are confident that this transaction with HNI represents the ideal fit for our family of brands and will deliver enhanced values to all of our stakeholders.”

The acquisition of Kimball gives HNI entry into two important high growth markets — hospitality and healthcare. While HNI has some experience in both, they are markets in which Kimball excels. HNI must also decide how to integrate Kimball’s Poppin brand, an online office furniture marketplace and how to integrate it into HNI’s own online selling strategies.

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 until the closing to ensure a seamless transition.

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.