Topps, known for its trading cards and Bazooka gum, is going public by merging with a blank-check firm in a deal that values the company at US$1.3-billion, the DealBook newsletter was the first to report.
The transaction includes an investment of US$250-million led by Mudrick Capital, the sponsor of the special purpose acquisition company, or SPAC, along with investors including Gamco and Wells Capital. Michael Eisner, the chairman of Topps and former chief executive officer of the Walt Disney Co., will roll his entire stake into the new company and stay on.
“Everybody has a story about Topps,” Mr. Eisner said. That’s what initially attracted him to the trading card company, which he acquired in 2007 through his investment firm, Tornante, and Madison Dearborn for US$385-million. Buying Topps was a bet on a brand that elicits an “emotional connection” as strong as Disney, the company Mr. Eisner ran for 21 years.
In the years since Mr. Eisner’s initial purchase, Topps has focused on a shift to digital, starting online apps for users to trade collectibles and play games. It also created “Topps Now,” which makes of-the-moment cards to capture a defining play or a pop culture meme. (It sold nearly 100,000 cards featuring Bernie Sanders at the presidential inauguration in his mittens.) And it has moved into blockchain, too, via the craze for nonfungible tokens, or NFTs.
The pandemic has driven new interest in memorabilia, especially trading cards. Topps generated record sales of US$567-million in 2020, a 23-per-cent jump over the previous year.
The secondhand market is particularly hot, with a Mickey Mantle card recently selling for more than US$5-million. “Topps probably made something like a nickel on it, 70 years ago,” said Jason Mudrick, the founder of Mudrick Capital. NFT mania will allow Topps to take advantage of the secondhand market by linking collectibles to digital tokens. Topps is also growing beyond sports, like its partnerships with Marvel and Star Wars.
It continues to see value in its core baseball-card business, as athletes come up from the minor leagues more quickly. “The trading card business has been growing for the last several years,” Topps CEO Michael Brandstaedter said. “While it definitely grew through the pandemic — and perhaps accelerated — it did not arrive with the pandemic.”
That resilience is part of the bet that Mudrick Capital is making on the 80-year old Topps. It’s a surer gamble, Mr. Mudrick said, than buying one of the many unprofitable startups currently courting SPAC deals.
“Our core business is value investing,” he said.
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