Star Equity (STRR) M&A Announcement summary

Deal rationale and strategic fit

• The merger creates a larger, diversified multi-sector holding company with pro-forma annualized revenues of $210 million, enhancing scale and revenue diversification.

• The combined entity aims to accelerate growth, maximize shareholder value, and outperform the Russell 2000 index over the medium term.

• NewCo will leverage corporate overhead and public company costs, improving efficiency and financial flexibility.

• The holding company structure enables focused M&A, strategy, and capital allocation, while operating teams focus on growth.

• Board and management will own approximately 24% of NewCo's pro-forma shares, aligning interests with shareholders.

Financial terms and conditions

• The transaction is a stock-for-stock merger: Star shareholders receive 0.23 shares of HSON for each Star share held, and preferred stock is exchanged one-for-one.

• Upon completion, Hudson shareholders will own approximately 79% of NewCo, Star shareholders 21%, with an estimated 3.49 million shares outstanding.

• Merger terms approved by both companies' boards and special committees; closing expected in the second half of 2025, pending approvals.

• No impact expected on Hudson's NOL protection provisions.

Synergies and expected cost savings

• At least $2 million in annualized cost savings are expected within 12 months post-merger, mainly from eliminating duplicative public company expenses.

• These savings equate to approximately $0.57 in incremental pro-forma EPS.

• Margin expansion anticipated, with pro-forma adjusted EBITDA margin rising from 3% in 2024 to over 10% by 2030.

• Additional revenue synergies are anticipated as NewCo grows and integrates operations.

• Enhanced ability to utilize $240 million in US Federal NOLs, improving tax efficiency.