Hastings Entertainment has agreed to merge with one of its biggest vendors and shareholders. According to an announcement released this morning, the retailer will merge with two companies controlled by Joel Weinshanker whose National Entertainment Collectibles Association, Inc. owns 12% of Hastings’ stock. Weinshanker also controls Draw Another Circle and Hendrix Acquisition Corp. If the deal is approved, Hastings will merge with Hendrix and become a subsidiary of parent company Draw Another Circle. More details of the deal will be released when the companies file documents with the Securities and Exchange Commission later this week.
The merger is subject to approval of two-thirds of Hastings’ shareholders. Shareholders controlling 44% of Hastings’ outstanding stock, including CEO John Marmaduke, said they will support the deal. As part of the proposal, Hastings shareholders will have the right to receive a cash payment of $3.00 for each Hastings share; Hastings stock was selling at $1.91 per share prior to the announcement of the offer. Hastings put the value of the deal at $21. 4 million. The deal is expected to be completed in the second quarter.
"NECA is a significant supplier of movie, book and video game merchandise and collectibles to the Hastings superstores, and we've had a close and growing business relationship with Mr. Weinshanker over the last decade,” Marmaduke said in a statement. “We believe Hastings' business will continue to benefit from our relationship with him and NECA."
Like most retailers, Hastings has tried different things to react to the changing retail environment, including expanding the types of products it offers. For the first nine months in the fiscal year ended January 31, 2014, sales were down 6.6% and its loss increased by $2 million to $12.5 million. The company said it was expecting to have a good fourth quarter; results are due out this week.
