NEW YORK (TheStreet) -- Two law firms are saying not-so-fast to Hastings' (HAST) Board of Directors following the announcement of an Agreement and Plan of Merger with Draw Another Circle and Hendrix Acquisition Group. Both Draw Another Circle and Hendrix are wholly owned by Joel Weinshanker. Weinshanker is also the president and sole shareholder of National Entertainment Collectibles Association (NECA), which already owns 12% of Hastings' outstanding shares.
Both law firms Brodsky & Smith and Tripp Levy sent out press reports Monday announcing that they were investigating the merger on behalf of shareholders. According to the the Agreement and Plan of Merger, Hendrix Acquisition would merge with Hastings with Hastings surviving as a wholly-owned subsidiary of Draw Another Circle. Under the Merger Plan, Hastings' common stock shareholders will earn the right to receive $3.00 per share they own.
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Hastings' Board approved the merger Monday morning and has advised shareholders to follow suit. CEO and Chairman John Marmaduke had this to say about the merger, "NECA is a significant supplier of movie, book and video game merchandise and collectibles to the Hastings superstores, and we've had a close and growing business relationship with Mr. Weinshanker over the last decade. Mr. Weinshanker, through his affiliation with the estates of Marilyn Monroe, Elvis Presley and Muhammad Ali, and his company's management of Graceland, is one of the leading drivers of the lifestyle industry, and we believe Hastings' business will continue to benefit from our relationship with him and NECA."
Lawyers representing shareholders at Brodsky & Smith counter, "The investigation concerns possible breaches of fiduciary duty and other violations of state law by the Board of Directors of Hastings for not acting in the Company's shareholders' best interests in connection with the sale process as an entity owned or controlled by Weinshanker currently owns approximately 12% of Hastings common stock. The transaction may undervalue the Company as an analyst has set a $5.00 per share price target on Hastings stock and Hastings stock traded at $4.20 as recently as June 17, 2013."
Hastings was up 58.0% Monday of news of the merger, trading at $3.01