Star Equity Holdings completed its acquisition of PD Machine, a Utah machine shop that repairs, rebuilds and machines equipment used in drilling and other industries. The deal adds an operating business to Star Equity’s portfolio; a separate purchase of the property used by the shop remains subject to closing conditions.
Star Equity paid $350,000 in cash and issued 75,000 shares of its 10% Series A cumulative perpetual preferred stock for the business, subject to customary purchase-price adjustments. The separate real-estate transaction would add $150,000 in cash and 35,000 preferred shares if completed.
Key details
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The operating business has been acquired. PD Machine merged into Alliance Machine Solutions, an indirect, wholly owned Star Equity subsidiary. The shop is based in Vernal, Utah, and primarily serves Utah and nearby states.
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The business purchase consideration includes cash and preferred stock. Star Equity paid $350,000 in cash and issued 75,000 shares of Series A preferred stock. The purchase price is subject to adjustments for debt, cash, transaction expenses and net working capital.
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Some consideration is held in escrow. At closing, $50,000 and 5,000 of the preferred shares were placed in escrow to cover potential indemnification claims and purchase-price adjustments.
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The property purchase is a separate, pending step. Star Equity plans to acquire the owned real estate through a merger involving Davis Rentals and its own subsidiary, for $150,000 in cash and 35,000 preferred shares. If specified conditions remain unmet or unwaived by February 28, 2027, Star Equity may choose not to complete that purchase.
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The shop has a lease for continued use of the property. Alliance Machine Solutions entered into a lease with Davis Rentals, allowing it to continue using the property while the separate real-estate transaction remains pending.
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The preferred shares carry a 10% cumulative dividend. The 75,000 shares issued for the operating business—and the additional 35,000 contemplated for the property—are shares of Star Equity’s Series A cumulative perpetual preferred stock, not common stock.
What changes for investors
Star Equity now owns PD Machine’s operating business, while ownership of the shop’s real estate has not yet transferred. The completed business acquisition was financed partly with preferred equity, which carries a cumulative 10% dividend; the separate property purchase would require additional cash and preferred shares if it closes.