Muscatine-based furniture maker HNI Corp. plans to acquire competitor Kimball International, the company announced Wednesday.

In a news release, HNI executives said they would buy Indianapolis-based Kimball for about $485 million. The deal values Kimball at $9 a share, a 34% premium on the stock price as of Tuesday.

The deal, which will require approval from Kimball shareholders and government regulators, would boost HNI's workplace furnishing division, the bread and butter of the company's business.

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The division struggled through the first two years of the COVID-19 pandemic as corporate and government demand for desks and office chairs dropped while the cost of raw materials increased. However, it turned a corner in 2022, earning a $3.4 million profit after losing about $5.5 million the previous two years.

"The combined company will have a stronger platform for growth, delivering significant benefits for our shareholders, members, dealers, and customers," HNI CEO Jeff Lorenger said in a statement. "We look forward to welcoming the talented Kimball International employees to HNI."

Kimball's brands include Kimball, National, Etc., Interwoven, Poppin, Kimball Hospitality and D’Style. The company owns or operates 23 factories, warehouses and offices in the United States, China, Mexico and Vietnam, including 15 in Indiana. The company employed about 2,400 workers in 2022 ― about 2,300 of them in the United States.

The company reported a $17.1 million loss in 2022. Kimball's financial report was weighed down by a $34.1 million goodwill impairment last year, the result of accountants determining that Kimball overvalued Poppin when it purchased the company for $110 million in November 2020. In their annual report, executives blamed "revised sales forecasts primarily attributable to changes in demand due to the ongoing COVID-19 pandemic and supply chain constraints."

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In a call with investors on Wednesday, Lorenger said the merger should help HNI increase sales, manufacture more furniture and deliver products faster.

"We'll be better positioned to reach a broad range of customers," Lorenger said.

While the company also sells home furniture, the workplace segment drives HNI's growth, accounting for about 63% of net sales in 2022. In addition to offices, Kimball makes furniture for the hospitality and health care industries.

Loranger told investors he believed the locations of Kimball's factories and warehouses will help HNI make and deliver products faster. He added that he believes the company's mix of products will be in high demand in coming years and that Kimball's health care business will create a new line of customers for HNI.

"We looked around to where the post-pandemic office is heading," Lorenger said of his team's decision to buy Kimball.

HNI's board has approved the purchase, according to the company's news release. It will fund the deal in part with debt.

The company reported about $17.4 million in cash on hand at the end of 2022, as well as $188.8 million in long-term debt.

Tyler Jett covers jobs and the economy for the Des Moines Register. Reach him at tjett@registermedia.com, 515-284-8215, or on Twitter at @LetsJett.

This article originally appeared on Des Moines Register: Muscatine-based HNI buys office furniture competitor Kimball