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From Home Furnishing Business

Herman Miller to Buy Furniture Retailer Design Within Reach

Manufacturer of such licensed furniture designs as the famed Eames chair Herman Miller (NASDAQ: MLHR) has agreed to buy contemporary home furnishings retailer Design Within Reach (OTC: DWRI).

Herman Miller and Stamford, Conn.-based Design Within Reach have a long-standing business relationship, and the retailer is one of the supplier's fastest growing dealers of Herman Miller product.

DWR posted revenues of about $218 million in 2013. The transaction is subject to regulatory approval or expiration of applicable waiting periods and is scheduled to close July 28.

Herman Miller will acquire an ownership interest in DWR equal to approximately 84 percent for an estimated $154 million in cash, subject to adjustment for net debt, changes in working capital, and other post-closing items.

As a result of the transaction, Herman Miller estimates it will receive future tax benefits with a present value of about $10 million.

DWR's CEO John Edelman and President John McPhee will together continue to lead the business within Herman Miller and will report to Brian Walker, CEO of Herman Miller. Following the transaction, the executives will convert their remaining ownership interest in DWR for an approximate 8.5 percent ownership stake within a newly formed Herman Miller consumer business unit.

Founded in 1998, DWR currently operates 38 retail studio locations in the U.S. and Canada, as well as an e-commerce store and a print catalog.

"The addition of DWR is a transformational step forward in realizing our strategy for diversified growth and establishing Herman Miller as a premier lifestyle brand, helping people create inspiring places where they work, live, heal and learn," Walker said. "This combination expands our reach in the higher margin consumer sector and we have identified multiple points of strategic leverage that will benefit our other segments and operations, as well as DWR's own growth plans."

Walker said the acquisition will enhance Herman Miller's visibility, as well as giving the company access to the retailer's exclusive product portfolio.

"This offers further benefit to our commercial workplace market and beyond," he said. "Additionally we are acquiring a complete consumer-focused infrastructure and an experienced and committed leadership team and workforce that truly values Herman Miller's design legacy. That leadership team will skillfully advance our consumer business while DWR gains new resources to further their growth plans. In short, we believe this acquisition dramatically advances our strategic interests and benefits customers, our business partners, and shareholders."

Edelman and McPhee issued a joint statement saying they were excited about joining the Herman Miller team.

"We've worked closely with the company and its leadership for many years and have great respect for their approach to business and people," the statement read. "We also share a passion for great design and making a difference in the world. This combination will enable us to accelerate our mission to make great, authentic modern design accessible." 

As part of the acquisition, DWR shareholders will be entitled to receive about $23 per share.

"An escrow account (borne solely by the largest DWR shareholders), will be established to satisfy any post-closing obligations resulting from the transaction," said Greg Bylsma, Herman Miller CFO. "Shareholders will receive further information from the Company regarding the acquisition shortly after closing." 

Herman Miller will host an analyst day and investor conference call and webcast July 31. The presentation will include comments from  Walker and other members of the management team on the company's strategy, including the acquisition of DWR. The presentation will also include a summary of the company's updated three-year financial goals. Details for accessing that conference call can be found online







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