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Knoll group on the selling block.

Financially-strapped Westinghouse Electric Corp. has put the Knoll Group up for sale.

After experiencing a $1.08 billion loss in 1991 and troubled by continued financial problems in 1992, Westinghouse Electric Corp. is seeking to sell The Knoll Group, one of the four largest contract furniture manufacturers in the nation.

Despite reporting sales of $673 million in 1991, The Knoll Group is expected to lose money this year, according to a Nov. 28, 1992, Chicago Tribune news article. The Knoll Group is being sold by parent company Westinghouse in order to divest Westinghouse's non-technology based units and help relieve Westinghouse Financial Service Inc.'s outstanding $6 billion debt incurred from bad real estate and corporate-finance loans.

The Knoll Group is being divested, according to Knoll Group C.E.O. Maurice C. Sardi, because "Westinghouse has decided to focus on five core businesses that will provide strong future growth for the (Westinghouse) corporation ... and the Knoll Group does not fit the new corporate focus."

Knoll Group's sales increased 59 percent in 1991 over 1990 figures, according to the Westinghouse 1991 annual report, but operating profit for 1991 was down $2 million due primarily to "the impact of deep discount levels caused by competitive pressures in the weakened economy and curtailed government spending."

At press time, no buyer had been named by Knoll officials. But a Jan. 14, 1992, letter from Knoll Group quotes Sardi as saying the company is "looking for a buyer who recognizes the long-term value of the business and who will continue to operate Knoll in a manner that will serve the design and technology interests of our customers."

Business and Institutional Furniture Manufacturers Assn. (BIFMA) executive director Russell Coyner speculated that a buyer may be hard to come by in "the mature" industry like the office furniture market.

"If the U.S. contract furniture market was booming, a Japanese or European buyer might be interested," Coyner said. "But with the empty office space glut and nothing really unique about Knoll aside from its design reputation, it may take some time before we see a buyer. The buyer certainly wants to be able to enter the U.S. contract furniture market successfully."

The Knoll Group was formed after Westinghouse acquired Shaw-Walker and Reff Inc. in the fourth quarter of 1989 and then acquired Knoll International in August 1990, according to the annual report. The buyout occurred at the end of the "merger mania" trend that swept the contract furniture industry from 1986 through 1989.

Shaw-Walker was purchased by Westinghouse in November 1989 for $78 million which included 934,826 shares of Westinghouse stock valued at $66 million. Reff Inc. was acquired by the corporation in December 1989 for $100 million. The purchase of Knoll International by Westinghouse included cash, Westinghouse common stock valued at $112 million and assumption of $111 million in existing Knoll debt.
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Title Annotation:Knoll Group Inc. up for sale by Westinghouse Electric Corp.
Author:Derning, Sean
Publication:Wood & Wood Products
Date:Feb 1, 1993
Words:477
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