Shares of Mudrick Capital Acquisition Corp. II (MUDS) surged 16% on Tuesday after the special purpose acquisition company (SPAC) announced its plans to bring The Topps Company public.
The merger values Topps at an enterprise value of $1.3 billion, or roughly 12.5 times its projected adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2021. The sports card and candy company enjoyed a 23% jump in sales in 2020 to a record $567 million.
Topps is working to broaden its e-commerce and mobile applications as part of its digital initiatives. It's also making a push into the rapidly expanding non-fungible tokens (NFTs) market.
"We believe Topps' culture of innovation, strong management team, expanding margins, robust cash flow, and conservative balance sheet set it apart from other consumer growth companies," Mudrick Capital Founder and Chief Investment Officer Jason Mudrick said in a press release. "It also is well situated with a universally recognized brand to capitalize on the fast-emerging market for collectible NFTs."
The deal is expected to close by the third quarter. Topps CEO Michael Brandstaedter will lead the combined company, which will operate under the name "Topps." Its stock will trade on the Nasdaq under the ticker symbol "TOPP."
Former Disney Chairman and CEO Michael Eisner will serve as Topps' chairman. His investment firm, Tornante Company, partnered with Madison Dearborn Partners to purchase Topps back in 2007. Eisner said he will convert all of his Topps shares into an equity stake in the merged entity. He also said,
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.