HNI announced it will acquire Steelcase (NYSE: SCS, NR) for $2.2 billion in cash and stock. After synergies, this equates to 5.8x Steelcase's trailing 12-month EBITDA. The company expects the deal to close in before the end of the calendar year. While we think this is an attractive valuation, it has the potential to get better as we think HNI's initial $120 million synergy target seems conservative. The company expects the acquisition to be slightly accretive in year one, with earnings accretion building in year two and beyond as synergies are realized. In addition to the accretive financial benefits of the acquisition, we think Steelcase is a highly complementary strategic fit for HNI that strengths its Workplace Furnishings business. HNI plans to fund the cash portion of the acquisition with debt. By our calculation, net leverage (including synergies) following the transaction would be just 2.1x, and we expect leverage to quickly decline thereafter given the strong cash generation of the combined companies. We raise our price target to $73 based on 15x our newly introduced 2027 EPS estimate of $4.87. Our previous $65 price target was previously based on 16x our former 2026 estimate of $4.00. Our Moderate risk rating recognizes HNI's long history of positive earnings and cash flow.