Topps Goes Public Via SPAC Deal

Baseball Card Makers Gets a $1 Billion Valuation

Topps, a maker of baseball cards, is going public via a deal with Mudrick Capital Acquisition Corp. II (MUDS), a special purpose acquisition company. The deal values Topps at $1.3 billion.

Mudrick Capital, Gamco, and Wells Capital are investing $250 million in Topps as part of the transaction. Private equity firm Madison Dearborn Partners agreed to sell most of its ownership stake in the baseball card company.

Michael Eisner, a former CEO of Disney (DIS) and the chairman of Topps, will stay on in his role. Eisner’s investment firm, The Tornante Company, will roll its equity stake into the new company.

Pandemic Drives Demand for Memorabilia

Since Tornante and Madison Dearborn Partners purchased Topps in 2007, there has been a focus on incorporating more technology into the company. Topps has created apps to enable users to trade collectibles and player cards. Topps also creates and sells cards which capture trending images at specific moments in time. For example, Topps sold close to 100,000 cards featuring Bernie Sanders, the Vermont senator, sporting his viral mittens. Topps is also eyeing the non-fungible token (NFT) market, which has taken off among collectors and investors.

The increasing demand for memorabilia is pushing Topps’ revenue higher. The company’s sales hit $567 million in 2020—a 23% increase from 2019.

Background on the SPAC Deal

SPACs like Mudrick Capital are shell companies created to raise money in order to acquire private companies. The SPAC-purchased company can then trade on the stock exchange without undergoing a traditional initial public offering.

Mudrick Capital said it was drawn to Topps partly because the market for collectibles has been red-hot recently. A Mickey Mantle baseball card recently sold for more than $5 million. Topps is also well-positioned to generate revenue in the NFT market by selling tokens attached to collectibles.

The company is also diversifying beyond sports, inking partnerships with Marvel and Star Wars, which are both owned by Disney (DIS). Investors will be eager to see how trends in the collectibles market unfold, and what that could mean for Topps’ public debut.

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