Star, the small‑cap holding company listed under HSON, said it is pursuing $40 million of EBITDA by the end of the decade. The company’s Hudson business services division, which accounts for roughly 60% of Star’s revenue, currently generates $3.9 million of trailing EBITDA and is projected to reach about $8 million after recent AI, digital, sales and marketing investments. Hudson also targets $100 million in gross profit with an incremental margin of 30% and aims for annual revenue growth exceeding 10% across all its segments, including Building Solutions and Energy Services.
Star disclosed a merger agreement with Harte Hanks, a century‑old fulfillment and marketing firm serving Fortune 500 clients. The transaction will be financed with approximately 50% preferred stock and 50% cash on hand, supplemented by Harte Hanks’ unused credit facility that carries an interest rate just above 6%. Management highlighted that the structure avoids common‑stock dilution and, after accounting for the $10 million in annual cost synergies, the deal values the target at less than three times EBITDA. Star’s preferred shares trade at a 10% dividend yield, which the company equates to ten times cash flow.
Historically, Star acquires assets at multiples of 3‑5 times EBITDA on a normalized basis. The firm noted that only about 5% of public micro‑cap companies meet its acquisition criteria, and a recent private‑market study indicated that 45% of such firms lack a viable succession or exit plan.
Operationally, Star’s Business Services division operates in a low‑turnover environment, contrasting with pre‑COVID attrition rates of 10‑15% at typical Fortune 500 firms, which have begun to recover. Its Energy Services segment focuses on geothermal drilling, oil and gas, carbon capture, hydrogen and helium services, with a tool‑rental product that represents a small share of total well costs.
Star has paid dividends for 24 consecutive years, underscoring its commitment to shareholder returns. CEO Jeff emphasized the company’s operating leverage, AI strategy, and the favorable valuation of the Harte Hanks transaction, stating that the combined EBITDA uplift makes the deal cost less than three times EBITDA.
