Flexsteel buying DMI
By Gary Evans -- Furniture Today, August 18, 2003
Dubuque, Iowa — Upholstery producer Flexsteel Inds. has agreed to acquire manufacturer and importer DMI Furniture for $44 million, including $27 million in assumed debt.
The sale, approved unanimously by both companies' boards of directors, is expected to be completed in September. Flexsteel will pay $3.30 per share for DMI stock, a 39% premium over its closing price last Tuesday before the sale announcement.
Flexsteel said DMI will be operated as an independent business unit and will retain its headquarters in Louisville, Ky. Timothy Hall, Flexsteel's treasurer, said the deal was as much about sound finances as about furniture.
"We have assets that were under-performing, meaning we had cash and they had debt on their books," Hall said. Flexsteel reported cash and cash equivalents for the year ended June 30 at $12.8 million, up from about $5.4 million the previous year.
Based on recent financial reports, the combined company will have annual sales of $400 million. Flexsteel reported last week that net sales for the year ended June 30 were $292 million (see story, page 63), and DMI had sales in the 12 months ended May 31 of $106.9 million.
Hall said the acquisition will give Flexsteel new capabilities.
"They have people overseas working with imports and we were using agents," said Hall. "They are in completely different product lines than we are — case goods versus upholstery. Our management philosophies match up well."
Flexsteel primarily makes upholstered furniture for home use, recreational vehicles and the hospitality industry. DMI makes and imports residential bedroom, dining room and occasional and commercial office furniture, with four plants and warehouses in Indiana and manufacturing sources in Asia and South America. DMI's divisions are Wynwood, Homestyles and DMI Commercial Office Furniture.
Hall said the companies will move slowly in meshing products and will take advantage of opportunities such as adding wood pieces to Flexsteel retail galleries and other Flexsteel divisions like hospitality.
"It would be nice to walk into a Marriott and say we can do all of your upholstery pieces and, by the way, our subsidiary, DMI, can do all your case goods," he said.
Bruce Lauritsen, Flexsteel president and chief executive officer, said DMI's "distribution, product lines and global sourcing infrastructure will enhance Flexsteel's focus on expanding its product offering, while the financial strength of Flexsteel provides the resources for continued growth of DMI Furniture."
"Not only is this a great business fit, but the two companies have similar cultures and share the same values," said Don Dreher, DMI's president and chief executive officer." We look forward to joining the Flexsteel organization."
The acquisition is subject to a majority of DMI stock being tendered, and other customary closing conditions. Holders of about 8% of DMI's common stock have already agreed to tender their shares.
