Steelcase to acquire Texas education furniture maker for $145 million

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by Joe Boomgaard, MiBiz

GRAND RAPIDS — The flurry of deals in the office furniture industry this week continued today with Steelcase Inc. announcing it has signed a definitive agreement to acquire a Texas manufacturer of education furniture. 

The Grand Rapids-based Steelcase (NYSE: SCS) said the deal for Smith System Manufacturing Co. of Plano, Texas bolsters its range of solutions in the education market.

According to filings with federal securities regulators, Steelcase plans to acquire all the outstanding capital stock of Smith System for about $145 million, with an adjustment for working capital.

Smith System generated roughly $82 million in revenue over the past 12 months, expanding at a compound annual growth rate of 25 percent, according to the filing. The company will continue to operate as an independent subsidiary with its own brand.

Steelcase said it would fund the transaction with cash on hand and debt through its existing credit facility.

In a filing, Steelcase said the deal, which is expected to close in the second quarter of its current 2019 fiscal year, will be “modestly accretive” to current fiscal year earnings and “more significantly thereafter.”

“As education markets continue to grow, the combination of Steelcase and Smith System will create incredible value for our customers,” Allan Smith, vice president of global marketing at Steelcase, said in a statement.

Steelcase hopes to double Smith System’s business in five years by plugging the products into its North American dealer network, according to Smith.

The deal caps off a busy week for West Michigan office furniture manufacturers ahead of the 2018 NeoCon trade show next week in Chicago.

Earlier, Herman Miller Inc. (Nasdaq: MLHR) announced two deals for minority stakes in European furniture companies.

The Zeeland-based manufacturer acquired a 33-percent equity interest in Nine United Denmark A/S for $66 million, plus the right to increase its ownership over time. The deal included a $5 million provision for the North American rights to the company’s HAY furniture brand.

HAY, which has recorded a 14 percent four-year compounded annual growth rate, projects revenues of $155 million in the 2018 fiscal year that ends in July.

Herman Miller also said it paid $6 million for 48 percent of the equity in Harderwijk, Netherlands-based Maars Living Walls. The company partnered with “select U.S. certified Herman Miller dealers, a European dealer, and members of the Maars management” on the deal. The Zeeland-based office furniture manufacturer also retained an option to acquire a controlling interest in the company over time. Maars generated roughly $65 million in revenue in its most recent fiscal year.

Additionally, Steelcase announced it was in the process of finalizing a partnership with furnishings designer West Elm to “design, manufacture and distribute” workplace solutions and offer them through Steelcase’s dealer network in the U.S. and Canada by year’s end.

The partnership will give Steelcase access to modern West Elm furniture “designed specifically for the workplace,” according to a statement.

Terms of the partnership were not disclosed.

West Elm, a brand of Sonoma, Calif.-based Williams-Sonoma Inc. (NYSE: WSM), offers a line of modern housewares and, since 2015, has marketed contract furnishings designed with a residential flair, according to a statement.

Published on Monday, June 11, 2018