Herman Miller, Inc., Announces the Acquisition of Nemschoff, Inc.
June 24, 2009
Herman Miller, Inc. (NASDAQ: MLHR), today announced that it has acquired Nemschoff , Inc. ("Nemschoff"). The transaction closed June 24, 2009. Nemschoff, with revenues of more than $90 million in 2008, has been purchased through a combination of $32 million in cash and the issuance of 2,041,666 Herman Miller shares. In addition, Nemschoff shareholders may be entitled to an additional payment based on the performance of the entity, as well as Herman Miller's share price, over the next two-year period. More details of the purchase agreement will be found in Herman Miller's associated 8K filing.
Nemschoff is a manufacturer of high-quality, leading-edge design and is recognized as a market leader in healthcare furnishings, with specific strength in soft seating and the patient care environment. Many of the Nemschoff family of products are also specified in the commercial office and education markets. The company's headquarters and largest operations are located in Sheboygan, Wisconsin, with additional manufacturing in Sioux Center, Iowa. Nemschoff has distribution across the United States and in Canada.
Brian Walker, Herman Miller's Chief Executive Officer, stated, "For quite some time we've been talking about the importance of expanding the universe of customers we serve and the solutions we bring them. The recent downturn in the global economy has only reinforced how critical this is to our long-term stability and success. In the U.S. and globally, our populations are aging and growing. As a result, the demand for healthcare services continues to grow faster than the overall economy. Therefore, we have focused an ever-increasing amount of our strategic resources toward growing our product and solution portfolio for this customer segment."
Walker continued, "The acquisition of Nemschoff is a significant step in Herman Miller's growth strategy and further evidence of our commitment to the healthcare market, where Herman Miller has been a leader for more than 40 years. In bringing Nemschoff into the Herman Miller Healthcare business we immediately expand our product breadth and depth and accelerate our healthcare strategy. We also believe Nemschoff will benefit as we introduce its products into our healthcare distribution channel, and that cost synergies exist in the combination of Herman Miller, Brandrud and Nemschoff."
In making the Nemschoff announcement, the company noted healthcare is an important and growing vertical market opportunity. Relative to other sectors of the economy, healthcare construction remains strong and is supported by significant drivers fueling expectations for future growth. These include an aging population, with the percentage of Americans over the age of 65 projected to grow from 12% to 20% by the year 2030. Additionally, 20% of the recent federal government stimulus package is focused on healthcare, while healthcare costs as a percentage of GDP are projected to grow from 16% to 20% by the year 2017. Global demand for healthcare services and related facilities is also expected to continue to rise.
Beth Nickels, President of Herman Miller Healthcare, said, "We are all excited by the new opportunities this creates for our healthcare business. The Nemschoff brand is among the very strongest in our industry and in combination with Herman Miller Healthcare and Brandrud we bring together more than 100 years of combined healthcare interiors knowledge, research, and experience. Together we provide the most comprehensive product portfolio in the industry."
With the acquisition of Nemschoff, the combined companies offer a full range of product applications from the waiting room to administrative offices, and from the clinical lab and pharmacy to the patient room. The designs of each brand are complementary to the whole, providing multiple performance levels and price points in the healthcare interiors category.
Nickels added, "The cultures and capabilities of the combined organizations are also highly compatible—we share a dedication to quality healthcare through great products that enhance the caregiver, patient, and family experience. Each is also known for their focus on innovative design, quality craftsmanship, great value, reliable operational performance, and a genuine commitment to environmental sustainability."
Mark Nemschoff, CEO of Nemschoff, said, "Nemschoff is proud to offer our reputation, capabilities and product line to support Herman Miller's healthcare strategy. We feel the combination of these companies will bolster each entity and we look forward to future success."
In announcing the purchase Herman Miller also noted that Mark Nemschoff and Paul Nemschoff will remain actively engaged in the business. Mark Nemschoff will join the Herman Miller Board of Directors and Paul Nemschoff will retain an executive role at Nemschoff and also join Herman Miller's broader healthcare leadership team. Commenting on these actions, Beth Nickels noted, "Mark's wisdom and insights, particularly regarding healthcare, will be a great addition to our Board, while Paul brings valuable experience to my leadership team. Both will be invaluable to the successful combination of our companies."
About Herman Miller
Herman Miller works for a better world around you—with inventive designs, technologies and related services that improve the human experience wherever people work, heal, learn, and live. Its curiosity, ingenuity, and design excellence create award-winning products and services, resulting in more than $1.6 billion in revenue in fiscal 2009. Innovative business practices and a commitment to social responsibility have also established Herman Miller as a recognized global company. In 2009, Herman Miller was again cited by FORTUNE as both the "Most Admired" in its industry and among the "100 Best Companies to Work For" in America, while Fast Company named Herman Miller among the innovative "Companies to Watch." Herman Miller trades on the NASDAQ Global Select Market under the symbol MLHR.
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like "anticipates," "believes," "confident," "estimates," "expects," "forecasts," "likely," "plans," "projects," "should," variations of such words, and similar expressions identify such forward-looking statements. These statements do not guarantee future performance and involve certain risks, uncertainties, and assumptions that are difficult to predict with regard to timing, extent, likelihood, and degree of occurrence. These risks include, without limitation, employment and general economic conditions, the pace of economic recovery in the U.S., and in our International markets, the increase in white-collar employment, the willingness of customers to undertake capital expenditures, the types of products purchased by customers, competitive-pricing pressures, the availability and pricing of raw materials, our reliance on a limited number of suppliers, currency fluctuations, the ability to increase prices to absorb the additional costs of raw materials, the financial strength of our dealers and the financial strength of our customers, the mix of our products purchased by customers, our ability to attract and retain key executives and other qualified employees, our ability to continue to make product innovations, the success of newly introduced products, our ability to serve all of our markets, possible acquisitions, divestitures or alliances, the outcome of pending litigation or governmental audits or investigations, political risk in the markets we serve, and other risks identified in our filings with the Securities and Exchange Commission. Therefore, actual results and outcomes may materially differ from what we express or forecast. Furthermore, Herman Miller, Inc. undertakes no obligation to update, amend or clarify forward-looking statements.