Star Equity Holdings To Acquire Harte Hanks At $5 Per Share Comprising Cash And STRRP Pref Shares At EV Of $38.4M

Following the effectiveness of the Merger, Harte Hanks will continue to operate under the Harte Hanks brand, and its operations are expected to be reported within Star’s Business Services division.

The terms of the Merger have been approved by the Boards of Directors of Star and Harte Hanks. Closing is subject to the affirmative vote of Harte Hanks stockholders at a special meeting to be held later this year, the effectiveness of a registration statement on Form S-4 registering the Star preferred stock to be issued as Merger consideration, and other closing conditions. The merger agreement also provides for a 30-day go-shop period during which Harte Hanks may solicit and evaluate alternative acquisition proposals, subject to Star’s customary matching rights and a customary termination fee payable by either party in specified circumstances.

Transaction Benefits

• Scale: Expands Star's current scale; the merged company will have FY 2025 pro-forma annual revenues of approximately $384 million and pro-forma adjusted EBITDA of approximately $30 million after estimated synergies of $10 million.
• Creates Diversified Business Process Outsourcing ("BPO") Platform: Positions Harte Hanks alongside Star’s Hudson Talent Solutions business within Star’s Business Services division, creating a multi-BPO platform serving blue-chip clients across talent solutions, customer care, marketing, sales, and fulfillment & logistics.
• Synergies: Approximately $10 million of estimated annualized run-rate cost synergies anticipated, including duplicative public-company corporate overhead as well as back-office and operational consolidation.
• Greater Revenue Diversity: Adds a new business to Star’s holding company structure and broadens the combined company’s end-market and client mix.
• Balanced Consideration: Up to 50% of the aggregate consideration will be paid in cash, with the balance, which may exceed 50%, paid in Star 10% Series A Cumulative Perpetual Preferred Stock ("Star Preferred Stock"), (NASDAQ:STRRP). No Star common stock will be issued in the Merger.
• NOL Utilization: The combined company will benefit from Star's $215 million1 U.S. Federal net operating losses ("NOL").
• Financing Capacity: Increased ability to finance growth, including acquisitions, by leveraging the combined company’s larger scale, cash flow, and credit profile.
  
  
  
   

Transaction Details

• The Merger values Harte Hanks at $5.00 per share of common stock, or approximately $38.4 million of equity value, based on approximately 7.68 million shares of Harte Hanks fully diluted common stock outstanding.
• Up to 50% of the aggregate Merger consideration (approximately $19.2 million) will be paid in cash, with the balance paid in Star Preferred Stock. Harte Hanks stockholders may elect to receive cash or Star Preferred Stock, subject to proration, with aggregate cash payments capped at the above amount and Star Preferred Stock elections uncapped.
• The cash portion of the consideration is expected to be funded with a mix of cash on hand and debt financing. Harte Hanks currently has in place a $25 million credit facility.
• Star will assume Harte Hanks' defined benefit pension plan assets and liabilities at closing.
• Pending Harte Hanks stockholder approval and the satisfaction of closing conditions, the Merger is anticipated to close before year end 2026.