Furniture maker acquiring company in education market for $145M
A local furniture manufacturer has signed a definitive agreement to acquire a maker of furniture for the education market.
Grand Rapids-based Steelcase said today it will acquire Plano, Texas-based Smith System Manufacturing Company as part of its growth strategy in the education market.
Smith System targets the pre-K-12 market.
Steelcase is acquiring all of the outstanding capital stock of Smith System for about $145 million, plus an adjustment for working capital.
Steelcase intends to fund the acquisition through domestic cash on hand and borrowings under its credit facility.
It expects the acquisition to be modestly accretive in fiscal 2019 and more significantly thereafter.
Steelcase said Smith System has grown revenue at a compounded annual rate of about 25 percent over the past three years to about $82 million over the trailing 12 months. About two-thirds of its revenue is generated during the summer months.
“As education markets continue to grow, the combination of Steelcase and Smith System will create incredible value for our customers,” said Allan Smith, VP of global marketing, Steelcase. “Together, we can help schools create outstanding learning environments where students thrive, such as collaboration spaces, makerspaces and tech labs.”
The transaction is expected to close during the second quarter of fiscal 2019, subject to customary closing conditions and regulatory approvals.
Smith System will operate as a subsidiary under its own brand.
Steelcase plans to double Smith System’s business within five years by expanding sales in North America through the Steelcase dealer network and bringing Smith System’s products to corporate customers and global markets, according to Steelcase’s Allan Smith.
“Steelcase and Smith System have complementary offerings, and we look forward to growing our business together in pre-K-12, higher education and corporate learning environments around the globe,” said Molly Parnell, VP of sales, Smith System.
Founded in 1912, Steelcase (NYSE: SCS) offers a portfolio of architectural, furniture and technology products and services designed to “unlock human promise and support social, economic and environmental sustainability.”
Steelcase sells through its family of brands: Steelcase, Coalesse, Designtex, PolyVision, Turnstone and AMQ.
The global manufacturer has more than 800 dealer locations and reported fiscal 2018 revenue of $3.1 billion.
Founded in 1905, Smith System aims to make educational environments “healthy, comfortable and inspiring” for students and educators.
The company produces furniture for the classroom, including school chairs, student desks and tables, teacher desks, classroom storage systems, book carts and more.