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Herman Miller and Knoll Announce Plans to Merge in 2021
Two of the design industry’s largest brands, Herman Miller and Knoll, announced that they have entered into a definitive agreement under which Herman Miller will acquire Knoll in a cash and stock transaction valued at $1.8 billion. The transaction, which has been unanimously approved by the boards of directors of both companies, is expected to close by the end of the third quarter of calendar year 2021, subject to the satisfaction of closing conditions.
Upon completion of the transaction, Herman Miller shareholders will own approximately 78% of the combined company and Knoll shareholders will own approximately 22%.
This highly complementary combination will create the preeminent leader in modern design, catalyzing the transformation of the home and office sectors at a time of unprecedented disruption. Herman Miller and Knoll collectively have 19 leading brands, presence across over 100 countries worldwide, a global dealer network, 64 showrooms globally, more than 50 physical retail locations and global multi-channel eCommerce capabilities.
“This transaction brings together two pioneering icons of design with strong businesses, attractive portfolios and long histories of innovation,” said Andi Owen, president and chief executive officer of Herman Miller. “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. At the same time, consumers are making significant investments in their homes. With a broad portfolio, global footprint and advanced digital capabilities, we will be poised to meet our customers everywhere they live and work. Together, we will offer a deep portfolio of brands, technology, talent and innovation, to create meaningful growth opportunities in all areas of the combined business.”
“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,” said Andrew Cogan, Knoll chairman and chief executive officer.
“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.”
Owen added: “In addition to driving value for Herman Miller and Knoll shareholders, dealers and customers will benefit from a broader combined portfolio that will deliver beauty, joy, efficiency and utility. The transaction will also create enhanced opportunities for employees across both organizations. Herman Miller and Knoll both have cultures guided by values that support problem-solving design, and doing well by doing good, and these shared beliefs will contribute to a smooth integration.”
Compelling Strategic and Financial Benefits
The merger of the two design industry giants comes with several strategic and financial benefits, including:
- Pairs two industry pioneers to catalyze the transformation of the home and office at a time of unprecedented disruption. As powerful trends reshape our lives—including distributed work, a greater focus on the home, digital disruption, the rise of DTC business models and a focus on sustainability, the health and well-being of employees, communities and the planet—the combined company will be well positioned to lead the industry in redefining home and office design solutions.
- Combines two highly complementary businesses to create a broader product portfolio. The transaction unites two exceptional portfolios of complementary brands, each with its own design legacy that places them at the epicenter of modern furnishings, and more broadly, modern design.
- Enhances scale and capabilities to drive growth and profitability. The combined company will have a scaled U.S. and international footprint to facilitate growth of the combined portfolio through Herman Miller’s and Knoll’s well-established distribution channels. Together, Herman Miller and Knoll will have increased reach and the ability to better serve customers across the contract furnishings sector, residential trade segment and retail audience. In addition, the transaction will enhance engagement with architects and interior designers, who support the decision-making for both Contract and Residential customers.
- Accelerates digital and technology transformation. Herman Miller’s digital transformation in both the retail and contract channels provides a strong foundation for the combined company to scale existing investments in both new and expanded digital capabilities. These investments will enable the combined company to further accelerate progress, ensuring it meets the highest level of manufacturing excellence, customer sales and service, and user experience.
- Brings together common cultures and capabilities, with a shared commitment to social responsibility. Herman Miller and Knoll have a long history and shared cultures and commitment to design, innovation, operational excellence, sustainability and social good. The transaction will ensure that the combined company continues to deliver the highest quality products to customers while further reinforcing Herman Miller’s and Knoll’s shared focus on building more sustainable, diverse and inclusive enterprises.
- Delivers significant financial benefits. The transaction is expected to generate $100 million of run-rate cost synergies within two years of closing, driven primarily by SG&A, supply chain, procurement and logistics savings. Bringing together Herman Miller and Knoll is also expected to generate significant revenue synergies across the combined business through enhanced scale, cross-selling, and digital and eCommerce opportunities. The transaction is expected to be accretive to Herman Miller’s adjusted cash earnings per share in the first 12 months following the close of the transaction.
Following the close of the transaction, Owen will serve as president and chief executive officer of the combined company. Cogan plans to depart the combined company upon closing of the transaction after a successful 30-year career with Knoll, during which time Knoll received the National Design Award for Corporate and Institutional Achievement from the Smithsonian’s Cooper-Hewitt, National Design Museum.
The transaction, which is expected to close by the end of the third quarter of calendar year 2021, is subject to approval by Herman Miller and Knoll shareholders, the receipt of required regulatory approvals and the satisfaction of other customary closing conditions.
Additional information on the transaction and related materials can be found on a joint transaction website at NewLeaderInModernDesign.com.