Update on Topps Stock Situation
ndleo
Posts: 4,136 ✭✭✭✭✭
Topps and the hedge fund that wanted to break-up the company have come to an agreement. The hedge fund backed off and Topps agreed not to adapt any corporate changes that would make a takeover more difficult. I guess the plan Topps' presented to the hedge fund satisfied their demands. Topps had hired Lehman Brothers to see how much they could get for the candy business. The plan is due in a 45 days or so.
Topps is a low volume trading stock, usually less than 80K shares per day. Lately it has been going over 100K on a regular basis, enough to raise the average daily volume to almost 91K.
My take - I think we should be hearing something soon. IMHO, I think Shorin will take the card business private and sell the candy business. With Fleer going down, I can't see anyone buying Topps for a price that Shorin wants.
Topps is a low volume trading stock, usually less than 80K shares per day. Lately it has been going over 100K on a regular basis, enough to raise the average daily volume to almost 91K.
My take - I think we should be hearing something soon. IMHO, I think Shorin will take the card business private and sell the candy business. With Fleer going down, I can't see anyone buying Topps for a price that Shorin wants.
Mike
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Comments
GG
What's more profitable --- the cards or the candy?
Seems like going private in the card business would be quite risky.
Erik
Even so the card business still does $125 million a year in sales. Shorin is only 67, so he needs something to do besides counting his profits from the candy sale. The rumor is that the profit from a candy division sale will be huge since the cost basis is so low.
As of noon, already 60K shares sold and the price is approaching $10. It is up 14.3% since the rumors started.
Despite the recent run-up someone keeps buying. We could be hearing something about Topps soon.
Live In Play
20-Jun-05
08:45 TOPP Topps Company upgraded to Strong Buy at CL King; tgt $14 (10.21 )
CL King upgrades TOPP to Strong Buy from Neutral with a $14 tgt. They think the hiring of Lehman early this year to explore the sale of the confectionary business will likely result in the sale of the whole company to a larger confectionary company. By firm's estimates, the shares could command up to $14.00, 37% above the current price. They say that since Lehman was hired possibly as early as January, they think a sale is probably sooner rather than later.
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Yes I am long in Topps. Usually I wouldn't post this on a board, but I think Topps being sold or broken up is newsworthy for all of us.
This is like the Wall Street "experts" that said HP would be better served for the Imaging & Printing business to be sold off from the computing & services arms of HP because it is much more profitable. I can tell you that would be insane.
What happened to the financial fundamentals of being diversified?
To me, candy and cards fit very well together. Maybe they need some new leadership to figure out how to make that happen. The go-to-market sales of both products are largely the same. Topps would be better served to get their product in supermarkets, drug stores and retail outlets like Target/Wall-Mart as opposed to the card shop dinosaurs.
If anything, they need to figure out how to get their card business more profitable by reducing the number of product lines that they have and reducing the prices to the consumer on many of their product lines. I think this allows them to get new collectors. I just can't see how parents or kids can afford $1.99 and higher card prices. If they can sell Bazooka brand at 99 cents then they can sell their base brand there...
Erik
Their web site highlights what is going on inside of their cards business --- TOO MANY PRODUCT LINES ---- They just introduced an innovative game called Hot Button while at the same time they integrated some other baseball type game into their Topps Total brand. Both games on listed side by side on their home page. Which one would you chose? Do they really need both? A link between Strat-o-matic and Topps would be the ultimate to fill that space...
You would think the profitability of their card division would be tied to the number of brands that they could flood the market with. Yet you mention their card business is not that profitable.
Some internal house cleaning would serve them well. That said, they have come up with some innovative concepts. They just need to scale it back...
Erik
I think they will be better able to fix the card division if it was a private company. A public company has to much short term pressure to grow profits. In the short term, the only way to increase sales is by more product.
Anyways, it looks like the candy division is gone.