Harte Hanks Agrees to $5-a-Share Sale to Star Equity, With a Cash-or-Preferred Twist
Harte Hanks, the small-cap customer-experience and business-process outsourcing company, has agreed to be acquired by Star Equity Holdings in a deal that values its equity at roughly $38.4 million and offers shareholders an unusual choice between cash and preferred stock. The two Nasdaq-listed companies announced the definitive merger agreement on Aug. 14, and the transaction remains subject to a shareholder vote and other conditions.
Under the terms described in the companies' releases, Harte Hanks (Nasdaq: HHS) stockholders would receive consideration valued at $5.00 per share. Rather than a straight cash buyout, the agreement lets holders elect either cash or shares of Star's 10% Series A Cumulative Perpetual Preferred Stock, subject to proration. The cash portion is capped at 50% of the total consideration, or about $19.2 million, according to both sides' descriptions of the deal.
The stock alternative is denominated in Star's existing preferred issue, which trades under the ticker STRRP. That instrument carries a 10% dividend rate and a $10.00 liquidation preference per share, meaning a Harte Hanks holder electing stock would receive roughly half a preferred share for each common share, based on the $5.00 valuation. Star Equity said no new common stock would be issued in the merger.
The $5.00 figure represents a premium of about 100% to Harte Hanks' unaffected share price, according to the target company's announcement. Star Equity said the roughly $38.4 million equity value is based on approximately 7.68 million fully diluted shares outstanding.
The agreement includes a 30-day go-shop period, expiring at 11:59 p.m. ET on Sept. 13, 2026, during which Harte Hanks may solicit competing proposals, subject to customary matching rights and a termination fee that would apply if the company accepts a superior offer. That window leaves room for the price and buyer to change before any vote, and the usual uncertainty accompanies a signed-but-unclosed transaction.
Completion is conditioned on approval by Harte Hanks stockholders, the effectiveness of a Form S-4 registration statement covering the preferred stock, and other customary closing conditions. Star Equity noted that a vote of its own shareholders is not required. Star said it expects the deal to close before year-end 2026; Harte Hanks framed the timeline as roughly 60 to 90 days.
Star Equity, a diversified holding company with building-solutions, business-services, energy-services and investment divisions, said it would fund the cash portion through a mix of existing cash and debt financing, and that availability of the required financing is a closing condition. Star also said it would assume Harte Hanks' defined-benefit pension plan, and Harte Hanks carries an existing $25 million credit facility.
Strategically, Star positioned the acquisition as an addition to its Business Services division. The combined company would have pro-forma fiscal 2025 revenue of about $384 million and adjusted EBITDA of roughly $30 million after an estimated $10 million in annualized run-rate cost synergies, according to Star's release. Chief Executive Jeff Eberwein described the transaction as creating a larger, more diversified outsourcing platform.
Harte Hanks framed the sale as a resolution to the challenges of remaining a small standalone public company. Board Chairman Jack Griffin said in the announcement, "The Board carefully considered the options available to Harte Hanks and believes this transaction represents the best outcome for our shareholders." President David Fisher characterized the price as a compelling premium that addresses the structural challenges the company faces at its size.
Harte Hanks, based in Texas, provides marketing, customer care, data, fulfillment and logistics services for corporate clients. On the deal, it was advised by Citizens Capital Markets & Advisory as lead financial adviser, with Oaklins DeSilva + Phillips, and by Baker Botts LLP as legal counsel.
As with any announced-but-unclosed merger, the transaction could still be repriced, delayed or terminated, and the go-shop process means a rival bidder could emerge before Harte Hanks shareholders vote. Holders weighing the cash-versus-preferred election would also be trading a fixed cash payout for a dividend-paying security whose market value can fluctuate. This article is for informational purposes only and is not investment advice.
