A federal court has issued a temporary restraining order against the merger of Hastings Entertainment with two companies owned by Joel Weinshanker, president and owner of National Entertainment Collectibles Association, which already owns 12% of Hastings's shares. Hastings announced the court order yesterday.
The order came in a lawsuit by Hastings shareholders who, as the company put it, "are alleging, among other things, that the merger contemplated in the Merger Agreement provides for insufficient consideration to be paid to Hastings' shareholders in exchange for their shares of Hastings' common stock, that the officers and directors of Hastings breached their respective fiduciary duties in the course of negotiating and approving the Merger Agreement and that the other defendants aided and abetted such breach of fiduciary duties." This was apparently one of many lawsuits that were filed in the weeks after the merger was announced.
The order, filed last Friday, May 30, restricts Hastings from completing the merger before June 12, when a hearing is scheduled on a preliminary injunction.
Hastings said it believes the lawsuit was "improperly and prematurely filed under Texas law and that the claims alleged therein are factually incorrect and deficient as a matter of law." Hastings intends to dispute the suit "vigorously."
Under the merger plan, announced in March, Hastings shareholders will receive $3 per share and the company will merge with Draw Another Circle and become a wholly owned subsidiary of Hendrix Acquisition Corp., both of which are wholly owned by Weinshanker. National Entertainment Collectibles Association is a major supplier to Hastings of movie, book and video game merchandise and collectibles.
