After 113 years as an anchor in the office furniture industry, Steelcase, one of the largest and most iconic brands, is being acquired by HNI Corp. in a $2.2 billion deal that will transform the commercial furnishings market.
It is the second major acquisition by HNI in as many years. The company purchased Kimball in 2023. Following this latest acquisition, HNI will be the largest office furniture maker in the world. The combined company will have pro forma annual revenue topping $5.8 billion and with an annual run-rate synergy of $120 million.
Steelcase executives — both past and current — greeted the news with shock. The “little” company in Muscatine that they used to dismiss is now their owner. While that might deflate some egos in Grand Rapids, it will be made easier by fattened wallets. Under the terms of the agreement, Steelcase shareholders will receive $7.20 in cash and 0.2192 shares of HNI common stock for each share of Steelcase they own. This values Steelcase at about $18.30 a share, a premium of nearly 80% to Friday’s close. The HMI board will grow from 10 directors to 12 to include tow of Steelcase’s independent board members.
The combined company will be a behemoth in the industry — once dealer issues are ironed out — with brands and products that range from the highest designed (and priced) products to furniture for start up offices.
In the announcement of the deal, HNI said the companies’ geographic footprints and dealer networks are highly complementary, which bolsters the combined company’s ability to serve more customers across diverse industry segments, including small and medium businesses. “This acquisition brings together two respected companies with complementary strengths and represents an exciting milestone in HNI’s growth journey,” said Jeffrey Lorenger, HNI’s chairman, president, and chief executive officer.
HNI projects that the combination will be highly accretive to non-GAAP earnings per share beginning in 2027. Upon completion of the deal, expected by the end of calendar year 2025, HNI shareholders will own approximately 64% of the combined company, while Steelcase shareholders will hold around 36%.
Industry watcher and founder of The Viscusi Group, Stephen Viscusi, said Loringer is a smart and ambitious leader and acquired a brand that had been the gold standard of the contract industry. “Steelcase leadership of late has let that brand tarnish and the stock has languished since it went public. Jeff is just the person to polish that brand today. Steelcase’s greatest asset in the past couple of years has not been its products or leadership — it is its Steelcase dealers,” he said.
Lorenger, who will lead the combined companies, now must convince those Steelcase dealers they will be as important as part of the HNI family, Viscusi said, which is not an easy task. Otherwise Viscusi predicts, Haworth, MillerKnoll, Teknion may be flipping a lot of them to their brands.
The dealer issue will likely be the most sticky for HNI to work through. Allsteel and Steelcase each have hundreds of aligned dealers across the country, many of them overlapping in the same market. When Herman Miller acquired Knoll, they faced the same competitive landscape. While the MillerKnoll dealer network is now settled, it took years (and a fair amount of consternation) to work through.
Of all the major office furniture makers, HNI has proved to most adept at integrating its acquisitions, through it has never purchased a company the size of Steelcase. HNI has been praised for its integration of Kimball, which it acquired a little over two years ago.
Steelcase will continue to operate as a stand-alone brand and maintain its offices in West Michigan. Steelcase employs about 11,000 employees globally, but only about 3,500 are in the Grand Rapids area.
And it is the global reach of Steelcase that will be a new challenge for HNI. Steelcase has nearly $1 billion in sales outside North America and has showrooms around the world, including major cities like Dubai, London, Munich, Paris, Hong Kong, Beijing, Delhi, Kuala Lumpur, Mumbai, Shanghai, Singapore, Sydney, Tokyo and Toronto — to name just a few. Steelcase also operates a factory in Reynosa, Mexico.
Traditionally, HNI and its brands have focused much less on the international market.
In a letter to employees, Steelcase President and CEO Sara Armbruster said the companies will establish a joint integration planning team that will prepare a “detailed and thoughtful” approach to bring the businesses together, though what will happen to Steelcase’s plants in West Michigan remains up in the air.
“HNI recognizes that the Steelcase team is our greatest strength, and they share our commitment to investing in employees and supporting their career growth in this new and dynamic organization,” said Armbruster in the letter to employees. “I am confident that this combination will create new career opportunities for team members as we grow our business and shape the future of the workplace together.”
While news about two publicly traded companies combining is a tightly held secret, there were clues that a deal could be in the works. Many industry watchers were left scratching their heads after visiting Steelcase’s new showroom in Fulton Market. There were few new products launched and the showroom itself was barely changed from when it was occupied by Knoll, leaving many to wonder why they didn’t make a bigger splash at the event.
According to details of the transaction, the Steelcase brand will remain, as will the company’s headquarters in Grand Rapids. Still, the acquisition is a blow to the Steelcase legacy.
Founded as the Metal Office Furniture Company on March 16, 1912, the company’s legacy of innovation began with its first product — the fireproof metal waste basket — a leap forward in safety and productivity for its time when, a century ago, cigar and pipe smokers risked workers lives because of fires caused from ashes dumped in wicker wastebaskets. From that humble beginning, Steelcase built the largest office furniture company in the world. The company was built on research and insights about the changing nature of work, what workers need today and how the workplace can help organizations compete in a complex, interconnected world.
It worked. By the 1960s, Steelcase had about 10,000 employees in Grand Rapids. And by the turn of the millennium, the company had sales reaching $4 billion. Shortly after reaching those heights, the company faced a changing global business environment. It was forced to shutter many of its West Michigan plants and reduce pay and bonuses — once the envy of every West Michigan factory worker.
Still, the company adjusted by focusing on research, emerging technology and the high-tech industry, led by former CEO Jim Hackett. It reduced its manufacturing footprint and made tough cuts to its workforce. The adjustments helped save the business, but Steelcase never really regained its strength as the industry leader after that under the leadership of Jim Keane and Armbruster.
Hackett said in a statement after he heard about the news that Steelcase has been an important part of his life for more than three decades, and he will always be grateful for the privilege of serving its people, dealers and customers.
“I’m deeply proud of the company’s legacy of design, innovation, and commitment to their communities, and I carry with me long-lived friendships and life lessons from my years there,” he said. “As this next chapter begins with HNI, my wish is that the talented people of Steelcase continue to thrive and that the values which have defined the company remain a source of strength. I wish HNI and everyone at Steelcase great success in building a future that honors the company’s remarkable heritage while seizing new opportunities ahead.”
Unlike the sale of Knoll to Herman Miller, Steelcase wasn’t sold because it was failing. Steelcase competitors slowly ate into the company’s sales as people began to work differently — away from highly-lucrative cubicles to open offices to ancillary furniture. The nature of the corporate world changed as well. Once ruled by huge legacy corporations (that were Steelcase’s bread and butter), the business world started being dominated by technology companies led by young executives who had no brand loyalty to huge office furniture makers like Steelcase. The pandemic didn’t help. It further changed the way people work, again moving them farther from Steelcase.
Doug Gregory, an industry insider who worked for both HNI and Steelcase, said that from a competitive standpoint, HNI aggressively pursued Steelcase starting in the mid-1980s.
“In helping write HON’s strategic plan in 1986, we determined to go after Steelcase’s soft underbelly on filing, desking and seating products with gusto,” he said. “Our focus was to offer 90% of their function for 50% of the price, target the Steelcase dealer, and win their business. Which we did. Steelcase won the systems, and they were happy. HON made lots of money.
“In 1993, I was brought to Steelcase to help create a brand to compete with HON. They didn’t have a clue what their costs were, and once they lost out on Anderson Hickey and United Chair, the brand never had a chance. Steelcase never recovered from their hubris of growth from cubicles. They were boxed in by innovators, cost constraints, poor leadership and an incredible lack of internal discipline.”
He said Steelcase consistently failed to connect the dots and in the office furniture industry, Gregory said they are not alone. The larger issue, he said, is that the contract furniture industry lacks a mission and a vision to accomplish it.
“To the world focused on the future of work, this transaction will be met with a big “meh,” he said, “if anyone is aware of it at all. It didn’t have to be that way, and still doesn’t. The challenges workers face are immense, and we are focused on the new orange and different ways to cut a slab of MDF. Is someone ready to get real yet?”
At Steelcase, the tone is upbeat about the acquisition.
“HNI is a leader in workplace and residential building products in North America with a family of trusted brands and a broad network of more than 600 dealers,” Armbruster wrote in a letter to employees. “Like us, they are an organization built on honesty and integrity, with a culture centered around treating their stakeholders with dignity and respect, protecting the planet and honoring their commitments. Together, we will be a diversified and resilient industry leader, positioned to succeed by offering the most respected and well-recognized brands across a wide range of price points and diverse industry segments including large corporate, small and medium-sized business, health care, education and hospitality.”