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After reportedly raking in $200 million total on a debt and equity trade on AMC Entertainment and on call options in GameStop during the meme stock mania earlier this year, Mudrick Capital's founder Jason Mudrick is turning his attention to cashing in on baseball cards, wrestling cards, NFTs and Bazooka chewing gum.
And all of that opportunity could be found inside of one 80-year-old company — Topps.
Mudrick Capital Acquisition II, a SPAC founded by widely followed distressed investor Mudrick, will contribute $100 million to a deal that will bring trading card pioneer Topps back to the public markets. The deal values Topps at $1.3 billion.
"This is not a distressed company by any means. We looked at a lot of opportunities. What really drew us to the Topps opportunity was the power of the brand. When we heard Topps was looking to go public, the first thing I did was run home and dig out all my old baseball cards which were in shoeboxes and buried back behind old shelves. All the guys I work with did the same thing. We found ourselves sitting around the table telling stories from 30 and 40 years ago," Mudrick said on Yahoo Finance Live.
The Tornante Company, founded and owned by former long-time Disney chairman and CEO Michael Eisner, purchased Topps in 2007 for $385 million. Since then, Topps has expanded into digital trading cards and more recently, NFTs. Total sales in 2020 clocked in at a record $567 million, up 23% year-over-year. Eisner said the company is profitable.
Eisner — long known as a sports aficionado — will stay on as chairman of Topps after the deal closes.
“We are moving from an analog company to a digital company. We have tremendous earnings, great revenue and great cash flow. We'll be able to do M&A once we are public. It just seemed like the right time. We decided before this boom and blockchain that we are ready to go [public]. Topps is the same financially as Disney was when we went in 1984. If we do 10% of Disney, that would be very good," Eisner said on Yahoo Finance Live.
Mudrick said he and his team looked at a wide variety of companies to merge with their SPAC. They ultimately settled on Topps because of its storied brand and solid financials.
"This is one of the best management teams we have ever had the pleasure of getting to know. And probably the most important thing for us is that we are value investors. We did look at electric vehicle companies. We looked at flying car companies. We couldn't wrap our heads around the revenue situations where your valuation was justified by future projections that look like a hockey stick," Mudrick added.
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