The Topps Company, Inc., parent company of Bazooka Candy Brands, and Mudrick Capital Acquisition Corporation II (MUDS), a publicly-traded special purpose acquisition company, has announced a definitive agreement for a business combination that will result in Topps becoming a public company.
Upon closing of the transaction, which is expected in late second or early third quarter, the combined company will be named Topps and remain listed on NASDAQ under the new ticker symbol “TOPP.”
Building on its 80-year heritage, Topps has transformed its core sports & entertainment and confections businesses through innovation and diversification into a portfolio of complementary product offerings including expanded e-commerce, mobile digital applications and digital e-gifting solutions.
Topps had record sales of $567 million in 2020, representing a year-over-year increase of 23 percent. Topps drives revenue through its widely recognized brands across the globe via the following product offerings:
• Confections, under the Bazooka Candy Brands tradename, spans a branded portfolio of novelty confections delivering engaging Edible Entertainment with product lines under the Bazooka, Ring Pop, Juicy Drop, Push Pop and Baby Bottle Pop brands.
• Physical Sports & Entertainment, built upon strategic licensing partnerships including Major League Baseball, Major League Baseball Players Association, UEFA, Bundesliga, Major League Soccer, Major League Soccer Players Association, National Hockey League, National Hockey League Players Association, Formula 1, Disney, Star Wars and World Wrestling Entertainment and comprising a broad portfolio of trading cards, stickers and albums and trading card games sold in stores around the world as well as through its fast growing e-commerce platform, topps.com
• Digital Sports & Entertainment, including interactive mobile apps Topps BUNT, TOPPS KICK, Topps NHL SKATE, Disney Collect! by Topps, Marvel Collect! by Topps, Star Wars™: Card Trader by Topps and Topps WWE SLAM™ creates communities of users who collect, trade and play online, and has recently commenced expansion into Blockchain/NFTs;
• Gift Cards, under the Topps Digital Services trade name, provides global gifting/payment solutions for leading digital companies including Airbnb, Deliveroo, DoorDash, Hulu, Instacart, Netflix, Nike, Twitch and Uber
Topps 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, topps.com.
Topps 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 offering with a focus on further penetrating the fast-growing digital gift card channel.
In confections, Topps 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.
Michael D. Eisner, former chairman and CEO of Disney and chairman of The Topps Company, will become chairman of the combined company’s board of directors. Also expected to join the combined company’s board of directors are Jill Ellis, coach of the U.S. Women’s 2013 and 2019 FIFA World Cup champions; Maria Seferian, general counsel of Hillspire LLC; Marc Lasry, co-owner of the Milwaukee Bucks and co-founder of Avenue Capital Group; and Andy Redman, president of The Tornante Company.
The combined company will continue to be led by Michael Brandstaedter, president and CEO 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,” Eisner said. “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. Through this transformation, Topps has enjoyed a strong partnership with Madison Dearborn Partners. 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 transaction is anticipated to generate gross proceeds of up to approximately $571 million of cash, assuming no redemptions by the public stockholders of MUDS. This additional capital will be used to purchase shares from existing Topps shareholder Madison Dearborn Partners, which intends to sell the majority of its ownership position, and to fund transaction related fees and expenses. This includes a private placement of $250 million of common stock in MUDS, including participation from funds and accounts managed by GAMCO Investors and Wells Capital Management and including up to $100 million from Mudrick Capital.
The pro forma implied equity value of the combined company is $1.163 billion at the $10.15 per share PIPE price, assuming no redemptions by the public stockholders of MUDS. The transaction implies a pro forma enterprise value for The Topps Company of approximately $1.3 billion, or 12.5 times 2021 projected adjusted EBITDA with estimated net debt of less than $150 million.
The boards of directors of Topps and MUDS have unanimously approved the transaction. The transaction, which will require the approval of MUDS stockholders, is subject to other customary closing conditions, including the receipt of certain regulatory approvals and a minimum cash condition and is expected to close in the late second or early third quarter of 2021.
“Topps is an 80-year-old company with decades of rich tradition and history, but very much built for the 21st century,” Brandstaedter said. “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. 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.”