Hastings Entertainment will be acquired by companies owned by Joel Weinshanker, the licensing and merchandising entrepreneur who controls National Entertainment Collectibles Association, Inc., which is a major player in "Twilight" and Elvis Presley merchandise.
According to the announcement, Weinshanker will pay $3.00 a share, a premium of 57.1% over the average $1.91 per share price it closed at on Friday March 14, and a 61.3% premium over the average trading price for the last 30 days.
Late last year, Wienshanker partnered with the Authentic Brands Group to buy Elvis Presley Enterprises from Core Media Group.
In his latest deal, Weinshanker already owns 12% of Hastings shares, putting the value of the Hastings buyout at about $21 million. The offer is contingent on at least two-thirds of the 72.3 million outstanding shares approving the deal. According to the announcement, Hastings chairman/CEO John Marmaduke and his family will vote with their 32% of shares, meaning the deal already has 44% of the shares lined up.
According to Business Wire, former United States Securities and Exchange Commission attorney Willie Briscoe and the securities litigation firm of Powers Taylor LLP are investigating potential fiduciary claims against the Board of Directors of Hastings Entertainment, Inc. That announcement notes that the $3 price is below the 52-week high of $5.45 and at least one analyst’s estimated value of $5.00 per share.
In its last financial earnings report, Hastings, which runs 127 superstores in small towns and tertiary markets, reported a $12.5 million loss on revenues of $260.1 million for the nine-month period ended Oct. 31, 2013. Typically, the multimedia merchant reports red ink during the first nine-months of the year -- if it is going to have a profitable year, it will need a strong fourth quarter.
"NECA has been a core supplier to Newbury Comics for 20 years, and Joel is extremely knowledgable, even visionary, in the collectibles and merchandising marketplaces," says Newbury Comics CEO Mike Dreese. "The danger is he doesn't know retail."
That likely means that Wienshanker is counting on most of the Hastings management team to stay in place.
Dreese says he doesn't forsee NECA having any problem from other retailers over the Hastings deal. Hot Topic and Forever 21 probably won't have an issue with his acquiring Hastings because neither of those retailers locate in the small towns where Hastings stores are located.