JASPER — For years, Kimball International has been in the business of furniture and electronics.
Both segments have been profitable, but to some, the two didn’t seem to fit.
Financial analysts understand electronics, or they understand furniture. Almost none understand both.
This seemed to stifle the company’s stock price. Kimball’s decision to spin off its electronics division should make both segments more appealing to analysts and investors.
“Both will be a pure play,” Kimball spokesman Marty Vaught said. “They’ll be a furniture side, and they’ll be electronics.”
The move, announced Monday, will mean the two will trade as separate public companies. The furniture business will continue under the Kimball International name. Kimball Electronics will diverge into its own entity.
The split will be complete in about eight to 12 months. Once it is finished, James Thyen will step down as Kimball’s president and CEO, and Douglas A. Habig, who serves as chairman, will retire. Both will resign their positions as directors.
Donald D. Charron will be chairman and CEO of Kimball Electronics, and Robert F. Schneider will lead Kimball International.
Vaught said the split has been in the works for about a year and a half.
“We feel very good about this going forward,” he said. Both businesses “are very strong in their current markets. They are very strongly positioned to grow.”
Kimball still will be headquartered in Jasper, and no layoffs are expected.
Asked what Kimball’s split would mean for its more than 6,000 workers, Vaught said, “Virtually nothing.”
“We’re not closing anything. We’re not shifting anything,” he added.
Tim Mahoney, an economics instructor at the University of Southern Indiana, said corporate spinoffs are not uncommon. He compared Kimball to the food giant Kraft, which in 2012 spun off its snack operations. Oreo, Nabisco and Cadbury now trade under the label Mondelez International. Its grocery brands — Velveeta, Miracle Whip and Oscar Mayer — still carry the Kraft name.
“What most of these companies want to do is help define themselves better,” Mahoney said.
If a company deals in two different businesses, “people get confused about well, what are you?” he added.
The best way to resolve this is to divide the corporation in two. Mahoney said it was a wise move for Kimball to cleave electronics from furniture. There will be less misunderstanding among analysts and investors, and both companies will be more agile.
“From a strategic standpoint, these are folks that are good managers,” he said of Kimball’s executives. “They thought this thing through.”
© 2010 - 2025 Jasper Herald Company. All Rights Reserved.