Digital technology firm Harte Hanks has sold its 3Q Digital subsidiary to an entity owned by certain former owners of the 3Q Digital business for $5 million in cash. According to Harte Hanks, subject to customary working capital adjustments, and up to an additional $5 million in cash payable to Harte Hanks if the 3Q Digital business is sold again (provided that certain value thresholds are met).
The $35 million earn-out related to the Harte Hanks acquisition of 3Q Digital in 2015 was assigned to the Buyer, therefore relieving the company of the obligation. Harte Hanks also expects that it will be due a yet-to-be-quantified tax refund related to the sale after it files its 2018 US federal income tax return.
“We explored a number of alternatives, and selling 3Q Digital back to David Rodnitzky and his senior leadership team was the best outcome for our stockholders, clients and employees,” said Karen Puckett, Harte Hanks President and CEO. “I continue to have great respect for David, his team at 3Q and the work they do. We look forward to continuing our partnership with 3Q Digital to bring their services to Harte Hanks clients.”
“We are appreciative of all the support and partnership provided to us by Harte Hanks over the last three years and plan to continue to work closely with them to support our current and future clients,” said David Rodnitzky, 3Q Digital CEO.
Harte Hanks said it is currently debt free, with cash reserves and has improved financial flexibility due to continued cost reductions, the previously announced $9.9 million preferred stock investment and the increase and extension of the company’s “covenant-lite” credit facility.
Harte Hanks is a marketing services firm specializing in multi-channel marketing solutions that connect clients with their customers. Harte Hanks offers end-to-end marketing services including consulting, strategic assessment, data, analytics, digital, social, mobile, print, direct mail and contact center.