Spin Master’s Zoomer Dino was awarded Toy of the YearThe Associated Press
Canada's most successful toy company, Spin Master Corp., is joining the recent parade of private companies filing to go public.
The Toronto-based company, known for its Air Hogs and Zoomer Dino products, said Monday it has filed to sell subordinate voting shares on the Toronto Stock Exchange, with RBC Dominion Securities Inc. and TD Securities Inc. acting as co-lead underwriters and joint book runners. The IPO offers a rare opportunity for Canadian public investors to own shares in a sizable homegrown toy company, following the sale of Montreal's Mega Brands to Mattel last year.
Spin Master follows a range of Canadian companies, including Shopify Inc., David's Tea and Stingray Digital, to go public in the face of enthusiastic investor demand. Like many of those companies, Spin Master has chosen to offer only subordinate voting shares, leaving existing shareholders with multiple voting stock and greater power.
In a regulatory filing, Spin Master revealed its "gross product sales" have increased by an average of 30 per cent over the past two years and 12 per cent over the past decade, reaching $812-million (U.S.) in 2014, up from $481-million in 2012. According to market research firm Euromonitor International Spin Master is the fifth largest toy company in the US, with a 2.8-per-cent share, trailing Mattel, Hasbro, LEGO and Hallmark Cards. It is also one of the top 10 toy companies globally.
The filing also reveals company has overcome a tumultuous period after demand for its hugely popular line of Bakugan toys declined steeply in the early 2010s. Overall gross product sales dipped from $919-million in 2010 to $481-million in 2012, forcing the company into a wrenching restructuring including a 35 per cent cull of employees.
Despite the dip and recovery, Spin Master sales have far outpaced those of the toy business globally, which have risen by just 4 per cent per year over the past five years. The company's sales in the first quarter were $117-million, up 35 per cent year over year. Meanwhile, the company said adjusted operating earnings had risen to $112-million last year, from $53-million in 2013 and an adjusted operating loss of $23-million in 2012. Spin Master also announced last week that it is buying one of the oldest privately held toy companies in the United States, New York-based Cardinal Industries, a maker of games, puzzles and licensed products.
The company, operated by childhood friends and co-CEOs Ronnen Harary and Anton Rabie and a third partner, chief creative officer Ben Varadi, since its founding 21 years ago, has not disclosed how much of the company it is selling or what the final price of the shares will be. But other Canadian-based companies, notably Shopify and David's Tea, have met with healthy appetite and zesty debuts on the stock market in the past month.
Sean Silcoff