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Acquisitions | 9 Months Ended
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Mar. 02, 2024
Business Combination and Asset Acquisition [Abstract] |
Acquisitions | Acquisitions Knoll, Inc. On July 19, 2021, the Company completed the acquisition of Knoll, a leader in the design, manufacture, marketing and sale of high-end furniture products and accessories for workplace and residential markets. The Company has included the financial results of Knoll in the condensed consolidated financial statements from the date of acquisition. The transaction costs associated with the acquisition, which included financial advisory, legal, proxy filing, regulatory and financing fees, were approximately $30.0 million for the twelve months ended May 28, 2022 and were recorded in general and administrative expenses. Under the terms of the Agreement and Plan of Merger, each issued and outstanding share of Knoll common stock (excluding shares exercising dissenters rights, shares owned by Knoll as treasury stock, shares owned by the deal parties or their subsidiaries, or shares subject to Knoll restricted stock awards) was converted into a right to receive 0.32 shares of Herman Miller, Inc. (now MillerKnoll, Inc.) common stock and $11.00 in cash, without interest. The acquisition date fair value of the consideration transferred for Knoll was $1,887.3 million, which consisted of the following (in millions, except share amounts):
| Knoll Shares |  | Herman Miller, Inc (now MillerKnoll, Inc.) Shares Exchanged |  | Fair Value
Cash Consideration: |  |  |  |  |
Shares of Knoll Common Stock issued and outstanding at July 19, 2021 | 49,444,825 |  |  |  |  | $ | 543.9 |
Knoll equivalent shares for outstanding option awards, outstanding awards of restricted common stock held by non-employee directors and outstanding awards of performance units held by individuals who are former employees of Knoll and remain eligible to vest at July 19, 2021 | 184,857 |  |  |  |  | 1.4 |
Total number of Knoll shares for cash consideration | 49,629,682 |  |  |  |  |
Shares of Knoll Preferred Stock issued and outstanding at July 19, 2021 | 169,165 |  |  |  |  | 254.4 |
Consideration for payment to settle Knoll's outstanding debt |  |  |  |  | 376.9 |
Share Consideration: |  |  |  |  |
Shares of Knoll Common Stock issued and outstanding at July 19, 2021 | 49,444,825 |  |  |  |  |
Knoll equivalent shares for outstanding awards of restricted common stock held by non-employee directors and outstanding awards of performance units held by individuals who are former employees of Knoll and remain eligible to vest at July 19, 2021 | 74,857 |  |  |  |  |
Total number of Knoll shares for share consideration | 49,519,682 |  |  | 15,843,921 |  |  | 688.3 |
Replacement Share-Based Awards: |  |  |  |  |
Outstanding awards of Knoll Restricted Stock and Performance units relating to Knoll Common Stock at July 19, 2021 |  |  |  |  | 22.4 |
Total acquisition date fair value of consideration transferred |  |  |  |  | $ | 1,887.3 |
The aggregate cash paid in connection with the Knoll acquisition was $1,176.6 million. MillerKnoll funded the acquisition through cash on-hand and debt proceeds, as described in "Note 13. Short-Term Borrowings and Long-Term Debt." Outstanding unvested restricted stock awards, performance stock awards, performance stock units and restricted stock units with a fair value of $53.4 million converted into Company awards. Of the total fair value, $22.4 million was allocated to purchase consideration and $31.0 million was allocated to future services and is being expensed over the remaining service periods on a straight-line basis. Per the terms of the converted awards any qualifying termination within the twelve months subsequent to the acquisition resulted in accelerated vesting and related recognition of expense. The transaction was accounted for as a business combination which requires that assets and liabilities assumed be recognized at their fair value as of the acquisition date. The following table summarizes the fair value of assets acquired and liabilities assumed as of the date of acquisition:
(In millions) | Fair Value
Cash | $ | 88.0 |
Accounts receivable | 82.3 |
Inventories | 219.9 |
Other current assets | 29.2 |
Property and equipment | 296.5 |
Right-of-use assets | 202.7 |
Intangible assets | 756.6 |
Goodwill | 903.5 |
Other noncurrent assets | 25.1 |
Total assets acquired | 2,603.8 |
Accounts payable | 144.0 |
Other current liabilities | 153.1 |
Lease liabilities | 177.8 |
Other liabilities | 241.6 |
Total liabilities assumed | 716.5 |
Net Assets Acquired | $ | 1,887.3 |
The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill. Goodwill is attributed to the assembled workforce of Knoll and anticipated operational synergies. Goodwill related to the acquisition was allocated to each of the reporting segments with a total value as of the opening balance sheet date of $903.5 million. Goodwill arising from the acquisition is not deductible for tax reporting purposes. Certain measurement period adjustments were made during the twelve months ended May 28, 2022 to the preliminary fair values resulting in a net decrease to goodwill of $22.4 million primarily related to adjustments to the value of certain liabilities acquired and the fair value of intangible assets acquired. The allocation of purchase price was completed in the fourth quarter of fiscal year 2022. The following table summarizes the acquired identified intangible assets, valuation method employed, useful lives and fair value, as determined by the Company as of the acquisition date:
(In millions) | Valuation Method |  | Useful Life (years) |  | Fair Value
Backlog | Multi-Period Excess Earnings |  | Less than 1 Year |  | $ | 27.6 |
Trade name - indefinite lived | Relief from Royalty |  | Indefinite |  | 418.0 |
Trade name - amortizing | Relief from Royalty |  | 5-10 Years |  | 14.0 |
Designs | Relief from Royalty |  | 9-15 years |  | 40.0 |
Customer Relationships | Multi-Period Excess Earnings |  | 2-15 years |  | 257.0 |
Total |  |  |  |  | $ | 756.6 |

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//805/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//205-20/tableOfContent + Details
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