Herman Miller, Inc. said Tuesday that it agreed to pay $78 million to double its stake in Hay AS, taking a majority stake in the Danish furniture designer.
The 34% holding it bought gives Herman Miller, the Zeeland, Mich., furniture company, a total of 67%. It purchased a 33% position last year. Co-Founders Rolf and Mette Hay retain the remaining one-third stake.
Herman Miller shares closed at $43.60, down 2.3%.
Herman Miller expects the transaction to close Dec. 2. And it sees the deal adding 1 or 2 cents to earnings per share in the second half of fiscal 2020, excluding the potential purchase-accounting impact of a required step-up in inventory carrying value.
On Monday, Raymond James downgraded Herman Miller stock to market perform from outperform.
The downgrade was unrelated to the Hay investment. Rather, it came as a report last week from the furniture trade association Bifma showed that incoming furniture orders fell 2.7% in August from a year earlier.
Since its inception in 2002, Hay has built a strong presence in Europe and Asia, and now it's trying to expand in the U.S. Meanwhile, Herman Miller gains a broader array of furniture to sell.
"With its proven success as a fast-growing global company, Hay's catalog of high-quality, well-designed furniture and accessories has been a welcome and transformative addition" to Herman Miller, the company said in a statement.
"Since the launch of HAY in North America in 2018 within its retail and contract channels, Herman Miller has seen meaningful progress, including launching the North American eCommerce platform, starting localized production, and opening three physical locations."
HAY can help Herman Miller cater to a younger, more urban audience, Herman Miller CEO Andi Owen said.