Star Equity Holdings has entered into a merger agreement to acquire Harte Hanks in a transaction valuing the customer experience and business process outsourcing company at approximately $38.4 million of equity value.
Harte Hanks stockholders will receive $5 per share through a combination of cash and Star Equity’s 10% Series A Cumulative Perpetual Preferred Stock.
Up to 50% of the aggregate transaction consideration, or approximately $19.2 million, will be paid in cash.
The remaining consideration will be paid in Star preferred stock, and depending on shareholder elections, preferred stock could account for more than half of the total consideration.
No Star common stock will be issued in the merger.
The boards of directors of both companies have approved the transaction.
Completion remains subject to approval by Harte Hanks shareholders, effectiveness of a Form S-4 registration statement covering the preferred stock consideration, and other customary closing conditions.
The merger is expected to close before the end of 2026.
The agreement also gives Harte Hanks a 30-day go-shop period during which it can solicit and evaluate alternative acquisition proposals.
Star retains customary matching rights, and the agreement contains termination fees under specified circumstances.
Harte Hanks provides customer experience and business process outsourcing services spanning marketing, customer care, sales, data, fulfillment, and logistics.
Following completion, the business will retain the Harte Hanks brand and operate within Star’s Business Services division alongside Hudson Talent Solutions.
Star sees the transaction as a way to create a broader multi-service BPO platform serving blue-chip customers across talent solutions, customer care, sales, marketing, and fulfillment.
The combined company would have generated approximately $384 million of pro forma fiscal 2025 revenue.
Pro forma adjusted EBITDA is expected to total approximately $30 million after incorporating an estimated $10 million of annualized run-rate cost synergies.
Star expects those savings to come from areas including duplicated public-company expenses, corporate overhead, back-office functions, and operating consolidation.
Management plans to use portions of Hudson Talent Solutions’ back-office infrastructure to reduce overlapping expenses while allowing Harte Hanks’ operating teams to remain focused on customers.
The company expects the merger to increase revenue diversification while improving the scale and cash flow of Star’s Business Services operation.
Star also believes the larger business could provide greater capacity for future acquisition financing.
The transaction has another financial consideration for Star because of its sizable net operating loss carryforwards.
As of December 31, 2025, Star had approximately $215 million in usable U.S. federal NOLs.
Star believes structuring the equity consideration with preferred shares rather than common stock should avoid triggering an ownership change under Section 382 of the Internal Revenue Code that could otherwise restrict its ability to use those NOLs.
Harte Hanks stockholders will be able to elect either cash or preferred shares, subject to proration.
Cash payments are capped at approximately $19.2 million, while elections for preferred stock are not capped.
The cash portion is expected to be financed through a combination of cash on hand and debt.
Star will also assume Harte Hanks’ defined benefit pension plan assets and liabilities at closing.
After the merger, Star expects to continue reporting four operating segments: Building Solutions, Business Services, Energy Services, and Investments.
Citizens Capital Markets & Advisory is serving as lead financial advisor to Harte Hanks, while Oaklins DeSilva & Phillips is also acting as a financial advisor.
Baker Botts is serving as legal advisor to Harte Hanks, while BakerHostetler is advising Star.
KEY QUOTES:
“We are excited to announce the signing of this merger agreement. Harte Hanks is a business we have followed for years, with a century-long heritage, blue-chip clients, and talented people.”
“Our team has run this playbook before, bring a good operating business inside our holding company structure, remove duplicative public company and corporate costs, and let the operators focus on serving clients and growing the business. We believe that adding Harte Hanks to our Business Services division alongside Hudson Talent Solutions creates a scaled, diversified outsourcing platform, and that the cost savings and increased revenue diversity will generate considerable value to our shareholders over time.”
“Since Star converted to its holding company structure, our goal has been to acquire attractive businesses, either to complement our existing platforms or to establish new growth platforms. The merger with Harte Hanks does both.”
“We intend to move quickly on integration, leveraging Hudson Talent Solutions’ back-office infrastructure to eliminate duplicative operating-company overhead, while Harte Hanks continues to operate under its own brand with its operating teams and client relationships intact from day one.”
Jeff Eberwein, CEO of Star Equity Holdings
