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Topps Going Public in $1.3 Billion SPAC Deal

The venerable collectibles company  Topps Co. has announced it is going public through a merger with a ‘blank cheque firm’ in a deal that values the combined company at $1.3 billion.

Michael D. Eisner, former Chairman and Chief Executive Officer of Disney and Chairman of The Topps Company, will become Chairman of the combined company’s board of directors. The combined company will continue to be led by Michael Brandstaedter, President and Chief Executive Officer 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,” said Eisner. “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.”

Eisner became Chair of the company after Topps agreed in 2010 to be bought by Michael Eisner’s Toranteand private equity firm Madison Dearborn Partners for $385.4 million in cash. The company has since grown its revenues and branched out into new sectors. The investors clearly now see the SPAC agreement as a means to cash out on the increased value of the company, while also raising more capital. That said, Eisner himself vows he will not be selling any of his own shares, banking on continued growth.

Among the innovations Topps has adopted in recent years is its deep dive into the world of NFTs, such as the new NFT Godzilla collectibles it has developed with Toho, the owner of the Godzilla franchise.

“Through this transformation, Topps has enjoyed a strong partnership with Madison Dearborn Partners,” Eisner said. “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.”

The deal with Mudrick Capital Acquisition Corp II, or MUDS, will generate gross proceeds of $571 million, including a $250 million private investment led by Mudrick Capital and institutional investors such as GAMCO Investors and Wells Capital Management, among others. Shares of MUDS, a special purpose acquisition company (SPAC), were up more than 7% at $10.57 in the first day of pre-market trade.

“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,” said 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.”

Renowned for its sports trading cards, 80-year-old Topps is looking to increase its presence in the e-commerce and digital apps industry through blockchain technology or non-fungible token (NFT)-based initiatives. Just last week, The Licensing Letter reported on Topps role as an early and enthusiastic player in the now-exploding NFT sector. (You can read our extensive report on Topps involvement in the NFT sector HERE, and dive in to our Special Report on NFTs at THIS LINK.)

NFTs are essentially digital assets, a type of blockchain token, which can be bought and sold and whose authenticity can be verified with blockchain technology. NFTs are now being used to establish a buyer’s ownership of a particular image, video, or other digital asset, and increasingly they are being used by brands to create a sense of scarcity of a particular digital asset. For example, while the NFT for a collage by artist Beeple sold for an eye-watering $69 million, anyone can copy the artwork and store it on their own computer.

Eisner, who bought Topps through his firm The Tornante Company in 2007, will remain Chairman of the combined company. Additionally, Tornante will roll its entire equity investment in Topps into the combined entity.

Topps got its start 80 years ago in the sports trading card business, but has branched out from there to become a leading player in the collectible and gift card sectors.

The company generated record sales of $567 million in 2020, a 23% increase from a year earlier.

SPACs like MUDS are shell companies which raise funds through an initial public offering (IPO) in order to take a private company public through a merger at a later date. MUDS raised $275 million through an IPO last year.

The Topps Company says it expects to close the transaction in the late second or early third quarter. The combined company will be called Topps and remain listed on the NASDAQ under the ticker symbol TOPP.

Topps is very well known in licensing circles, as it works with major sports leagues, digital entertainment companies, confectionery companies, and also puts out gift cards for tech companies like Airbnb, Door Dash, Netflix, Twitch, and Uber, among others.

Topps says in a statement that it is capitalizing on the accelerated interest in its multi-channel Sports & Entertainment business from growing enthusiasm around its innovative sports and entertainment collectibles, as well as growth from investments in its e-commerce platform,

The company has put a premium on growth through innovation with existing and new licenses, international expansion, curated experiential events, and innovative artist-inspired collectibles. Topps has further reimagined the collectibles universe through its transition to the digital marketplace, addressing the contemporary, more tech-savvy consumer demands for convenience, immediacy, value, social engagement, and interactive experiences within the changing retail landscape by leveraging its innovation and community. Topps is also capitalizing on its growing technological capabilities to advance its Gift Cards Sector offering with a focus on further penetrating the fast-growing digital gift card channel. In Confections, the company is fueling excitement and demand for its well-known novelty branded products through innovative new product launches and brand extensions, significantly increased e-commerce activity, and international expansion.

“Topps is an 80-year-old company with decades of rich tradition and history, but very much built for the 21st century,” said Michael Brandstaedter, President and Chief Executive Officer of Topps. “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,” he added. “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.”


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