JASPER, Ind — Kimball International, Inc. today announced that its Board of Directors has unanimously approved a plan to enhance shareholder value through a tax free spin-off of its electronic manufacturing services (“EMS”) segment.
The separation will result in two standalone publicly-traded companies: Kimball International, Inc. (“Kimball International”), an industry leader in the sale and manufacture of quality office and hospitality furniture; and Kimball Electronics, Inc. (“Kimball Electronics”), a leading global provider of electronic manufacturing services to the automotive, medical, industrial, and public safety markets. The Board expects the spin-off, which is intended to be tax-free to shareholders, to be completed in approximately 8 – 12 months.
“Since the founding of Kimball International over 60 years ago, our markets have evolved with some markets growing strongly while others we elected to exit. We have seen growth and then decline in markets from wooden television cabinets, acoustic pianos, electronic organs, to domestic U.S. wood veneer and dimension lumber markets. Surviving these changes required a constant reinvention of the Company within the markets we serve. These changes have been most acute in the last decade as we have developed a true global platform to serve customers within the EMS industry, as well as the impact of off-shore manufacturing in the furniture industry. As such, our Board determined that it is time to separate these businesses to allow for greater focus and growth. Additionally, the Board believes separating into two public companies will enable investors to value our different businesses separately, creating value and opportunities for both companies and their shareholders,” said Douglas A. Habig, Chairman of the Board.
James C. Thyen, President and Chief Executive Officer added, “We are excited to make this announcement and believe strongly that it is the correct strategic decision at this time for these reasons:
Donald D. Charron, currently President of the Kimball Electronics Group, will serve as Chairman of the Board and Chief Executive Officer of the new company Kimball Electronics, and Robert F. Schneider, currently Chief Financial Officer, will serve as Chairman of the Board and Chief Executive Officer of Kimball International.
The furniture company Kimball International will continue under the Kimball brand name and KBALB NASDAQ trading ticker symbol. Kimball Electronics will retain the Kimball brand name within the EMS market.
Kimball International will continue to build on the core strengths of its furniture businesses by providing furniture for the office and hospitality industries sold under the Kimball Office, National Office Furniture and Kimball Hospitality family of brand names. Kimball International currently is the 6th largest office furniture company and the largest in-room casegoods and seating supplier to the hospitality industry in the U.S.
Following the spin-off, Kimball International is expected to have annualized revenue of approximately $550 million on a pro forma basis and is expected to generate strong cash flow and have the financial flexibility to take advantage of future growth opportunities.
Kimball Electronics will be spun-off to form a leading global EMS provider serving the automotive, medical, industrial and public safety markets. Following the spin-off, Kimball Electronics is expected to have annualized revenue of approximately $700 million on a pro forma basis and maintain a strong balance sheet. It is also expected to be among the top 20 largest global EMS companies.