Topps, the trading card company, is going public by merging with a blank-check firm in a deal that values the company at $1.3 billion.
The transaction includes an investment of $250 million led by Mudrick Capital, the sponsor of the special purpose acquisition company, or SPAC, with investors including Gamco and Wells Capital. Michael Eisner, the chairman of Topps and former chief executive of the Walt Disney Company,
Eisner acquired Topps in 2007 through his investment firm, Tornante, and Madison Dearborn for $385 million and will roll his entire stake into the new company.
Upon closing of the transaction, which is expected in the late second or early third quarter, the combined company will be named Topps and remain listed on NASDAQ under the new ticker symbol TOPP.
The transaction is anticipated to generate gross proceeds of up to approximately $571 million of cash, assuming no redemptions by the public stockholders of MUDS. This additional capital will be used to purchase shares from existing Topps shareholder Madison Dearborn Partners, which intends to sell the majority of its ownership position and to fund transaction-related fees and expenses.
Topps reported sales of $567 million in 2020, representing a year-on-year increase of 23 percent. The company’s portfolio includes:
- Physical Sports & Entertainment comprising a broad portfolio of trading cards, stickers and albums, and trading card games sold worldwide;
- Digital Sports & Entertainment, including interactive mobile apps for users who collect, trade and play online, and including a recent expansion into Blockchain/NFTs;
- Gift cards, under the Topps Digital Services tradename; and
- Confections, under the Bazooka Candy brands tradename, spanning a portfolio of novelty confections delivering engaging Edible Entertainment.
Michael D. Eisner, who purchased Topps in 2007, will become chairman of the combined company’s board of directors. Also expected to join the board are Jill Ellis, coach of the U.S. Women’s 2013 and 2019 FIFA World Cup champions; Maria Seferian, general counsel, Hillspire LLC; Marc Lasry, co-owner, Milwaukee Bucks and co-founder, Avenue Capital Group; and Andy Redman, president, The Tornante Co.
The combined company will continue to be led by Michael Brandstaedter, president and CEO, of Topps.
“The strong emotional connection between the Topps brand and consumers of all ages is truly foundational, and, when combined with our growing portfolio of strategic licensing partnerships, creates a profitable business model with meaningful competitive advantages,” Eisner said.
“Equally important, the management team at the helm of Topps, which we’ve been building for the last 14 years, is outstanding, with deep roots in sports and entertainment, digital, gift cards and confections. Through this transformation, Topps has enjoyed a strong partnership with Madison Dearborn Partners. With the support of our new partners at Mudrick Capital, the company will continue its long history of innovation and global expansion, bringing consumers the best of collectibles and confections products while successfully extending into new verticals and emerging categories to take advantage of digital content innovation and high growth opportunities across the globe. That is why I’m not selling a single share of Topps stock in this transaction,” he added.
Brandstaedter noted: “Topps is an 80-year-old company with decades of rich tradition and history, but very much built for the 21st century. We partner with some of the world’s most iconic brands, and we are in the business of creating powerful consumer connections every day. The strategies we have implemented in recent years, including building a digital business that has deepened consumer engagement, have driven excitement and innovation across Topps, fueling strong and increasing revenue with accelerating profitability. The future for Topps has never been brighter, and, with a talented and dedicated management and employee base, we are excited for the road ahead.”
“We believe Topps’ culture of innovation, strong management team, expanding margins, robust cash flow and conservative balance sheet set it apart from other consumer growth companies,” says Jason Mudrick, founder and chief investment officer of Mudrick Capital. “It also is well situated with a universally recognized brand to capitalize on the fast-emerging market for collectible NFTs. We are excited to partner with this exceptional organization to help write the next chapter in the long history of its truly iconic brand.”
Photo courtesy Topps, Getty