Texas-based entertainment company Hastings is scheduled to be merged with a Delaware limited liability company, Draw Another Circle. The merger comes at a cost of $21.4 million, and it would convert the publicly-traded Hastings to a private. The agreement, however, like most mergers, is subject to shareholder approval. The company needs two-thirds of shareholders to approve. If the agreement passes, each shareholder will be paid $3 per share.
The current CEO of Hastings agreed to take a one-time, $1.5-million payment and leave the company after the deal if finalized. He has worked with it for 40 years. In general, when a company takes control of another firm, it fills top management positions in the with its own people, but Draw Another Circle intends to keep a vice president and chief operating officer on staff. Though some information has been disclosed, the merger agreement includes a confidentiality clause preventing company executives from talking about the merger or its specific terms.
The deal was recommended by the Hastings board of directors. Hastings began to suffer as media began to be distributed through the Internet. In 2006, it earned $548 million in revenue, but by 2012, it only earned $463 million. The original 7,000-employee force has been reduced by 2,000.
For many businesses, it can be difficult to determine when a buyout or other deal needs to be made. While these businesses often have a board of directors, it may be helpful for a business to consult with a lawyer who has experience with business law and negotiations. Talking to a lawyer may help protect a person's stated interests in business negotiations.
Source: Amarillo.com, "Hastings CEO takes $1.5M buyout as part of proposed merger", Karen Smith Welch, March 18, 2014