Kimball International, Inc. (NASDAQ: KBALB) (“Company”) 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:
- Focus – a spin-off will allow both companies to allocate capital and deploy resources in a more focused way, while executing strategies that will be most effective within their particular markets. At the same time, both will be able to optimize their capital structures in a manner that enables each to make the necessary investments for the future and maximize shareholder value.
- Value – Both companies will continue to market their well-known brands and leverage the capabilities of very experienced people. Each company will become more nimble and be better able to capitalize on market opportunities that create sustainable growth and enhance shareholder value.
- Shareholder Benefit – The spin-off will be tax-free to our current shareholders and provide them with more flexibility to maintain or enhance their investment in more focused companies with distinct growth opportunities.”
Upon completion of the spin-off, Mr. Thyen will retire from his current role as the Company’s President and Chief Executive Officer, as well as resign his position as a Director. Douglas A. Habig will also retire from the Company and resign his position as a Director.