Baseball card maker Topps goes public via SPAC
Topps, known for its trading cards and Bazooka gum, is going public by merging with a blank check company in a deal that values the company at $1.3 billion, the DealBook newsletter has reported on first to report it.
The transaction includes a $250 million investment led by Special Purpose Acquisition Company, or SPAC, sponsor Mudrick Capital, as well as investors including Gamco and Wells Capital. Michael Eisner, chairman of Topps and former chief executive of the Walt Disney Company, will bring his entire stake into the new company and remain there.
“Everyone has a story about Topps,” Mr. Eisner said. That’s what first attracted him to the trading card company, which he acquired in 2007 through his investment company, Tornante, and Madison Dearborn. for $385 million. Buying Topps was a bet on a brand that elicits as strong an “emotional connection” as Disney, the company Mr Eisner ran for 21 years.
In the years since Mr. Eisner’s initial purchase, Topps focused on going digital, launching online apps that allowed users to trade collectibles and play games. He also created “Topps Now,” which crafts cards of the moment to capture a defining piece or pop culture meme. (It’s old nearly 100,000 cards featuring Senator Bernie Sanders at the presidential inauguration in his mittens.) And he switched to blockchain, too, via the non-fungible token, or NFT, craze.
The pandemic has sparked new interest in memorabilia, especially trading cards. Topps generated record sales of $567 million in 2020, a 23% jump from the previous year.
The second-hand market is particularly hot, with a Mickey Mantle card recently selling for over $5 million. “Topps probably did something like a nickel on it 70 years ago,” said Jason Mudrick, founder of Mudrick Capital. NFT mania will allow Topps to take advantage of the second-hand market by tying collectibles to digital tokens. Topps is also expanding beyond sports, such as its partnerships with Marvel and “Star Wars.”
He continues to see value in his core baseball card business as athletes move out of the minor leagues faster. “The trading card business has been growing for several years,” said Michael Brandstaedter, CEO of Topps. “While it definitely grew during the pandemic – and perhaps accelerated – it didn’t happen with the pandemic.”
That resilience is part of the bet Mudrick Capital is making on 80-year-old Topps. It’s a safer bet, said Mr. Mudrick, than buying one of the many unprofitable start-ups currently courting SPAC deals. “Our core business is value investing,” he said.