Star Equity (STRR) M&A Announcement Transcript

Summary of Hudson Global and STAR Equity Holdings Merger Announcement Conference Call Industry and Companies Involved - Companies: Hudson Global (HSON) and STAR Equity Holdings (STRR) - Industry: Mergers and Acquisitions, Staffing and Recruitment Services Core Points and Arguments 1. Merger Announcement: Hudson and STAR signed a definitive merger agreement, marking a significant milestone for both companies [4] 2. Transaction Structure: STAR will merge into a wholly owned subsidiary of Hudson, with STAR shareholders receiving 0.23 shares of HSON for each STAR share held [5] 3. Ownership Post-Merger: Upon completion, Hudson shareholders will own approximately 79% of the new company (NewCo), while STAR shareholders will own about 21% [5] 4. Financial Projections: The merger is expected to create a larger holding company with pro forma annualized revenue exceeding $200 million and anticipated annualized cost savings of at least$2 million within 12 months [6] 5. Growth Goals: NewCo aims to reach $40 million in adjusted EBITDA by February 2030, based solely on organic growth [7] 6. Operational Segments: NewCo will consist of four reporting segments: Building Solutions, Business Services, Energy Services, and Investments [7] 7. Strategic Advantages: The merger is expected to enhance stock trading liquidity, market capitalization, and provide better financing terms for acquisitions [6][9] 8. Management Structure: The management team from both companies will lead NewCo, maintaining a decentralized operating model and a value-oriented acquisition strategy [10] Additional Important Information 1. Regulatory Approval: The merger is pending regulatory and shareholder approvals, anticipated to close in the second half of 2025 [6] 2. Cost Savings Details: Identified cost savings will come from eliminating duplicative functions, such as audits and public company costs [14][15] 3. NOL Utilization: NewCo will benefit from Hudson's substantial net operating losses (NOL), which will be utilized to offset taxable income [17] 4. Market Positioning: The merger aims to break out of "microcap purgatory," enhancing the visibility and liquidity of both companies in the market [55] 5. Shareholder Vote: A majority vote from both companies' shareholders is required for the merger to proceed [22][28] 6. Dividends: STAR's preferred stock will continue to pay dividends post-merger, with no changes to the terms [60] 7. Future Growth Strategy: Both companies plan to pursue organic growth and bolt-on acquisitions to enhance their market positions [37][39] This summary encapsulates the key points discussed during the conference call regarding the merger between Hudson Global and STAR Equity Holdings, highlighting the strategic rationale, expected benefits, and operational plans for the newly formed entity.