Hey, how about Pokemon HyperTV Network? It could happen.
NEW YORK, Aug. 27, 1999 1:00 p.m. ET (JagNotes.com)
Toy Biz Buzz: Hasbro Eyeing Topps
alk is buzzing in toy circles that Darth Maul and Pok‚mon could be altar-bound.
More specifically, so goes the speculation, Hasbro (HAS), 26, is eyeing a potential acquisition of Topps Co. (TOPP), 9 1/8.
Hasbro, whose 1999 sales are pegged at $4 billion, is the nation's second largest manufacturer of toys, behind Mattel. Included is a broad line of products tied to the "Star Wars" prequel, "The Phantom Menace."
Topps is a leading distributor of sports trading cards, as well as entertainment cards featuring the Star Wars and Pok‚mon themes. It posted sales of $261 million over the past 12 months
The Topps buyout buzz, which has found its way to Wall Street, is that Hasbro is in the throes of preparing an offer for Topps, and that the two companies may have already held exploratory talks.
Such speculation, plus Wall Street's infatuation with the Pok‚mon craze, has led to steady gains in Topps' shares, which are up sharply from their 52-week low of 2 1/8. The high for this period is 12 1/8.
(Pok‚mon, incidentally, Japanese for "pocket monster," began as an animated TV series in Japan and has since become a popular Nintendo video game. The game?s success in the U.S. paved the way for a dubbed version of the cartoon, which is now available on video as well.)
Hasbro, it's pointed out, has already told Wall Street it's interested in making acquisitions in the $500 million to $700 million range.
A Hasbro takeover of Topps, figuring one money manager's estimated buyout price of $14 a share, would run about $650 million.
One long-time Topps tracker, a broker with reasonably good ties to management, says a Hasbro-Topps deal would be a natural, given the product overlap. He also believes Topps' top brass would be readily receptive to an attractive offer.
Factoring in a declining market for sports trading cards, the broker calculates that about $12 a share, or $550 million, would be a realistic buyout price for Topps.
Topps also produces Bazooka brand bubble gum, as well as novelty lollipops and collectable toys.
Topps declined comment and Hasbro officials were not immediately available.
It's worth noting that a number of money managers rate Topps a good short sale (that is, a bet its stock will fall), based on the stock's big runup and the fact that prospective 1999 earnings are insufficient to justify the current stock price.
One money manager, a short seller, figures Topps will earn roughly 45 to 50 cents a share this year, "making the stock worth maybe $5 tops," he says.
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Big Burger King Pok‚mon Contract Set
On another matter related to Pok‚mon, reliable sources tell me that Burger King will soon give Equity Marketing (EMAK), a huge contract for a major Pok‚mon promotion.
Equity Marketing shares, apparently reflecting talk of the impending Burger King contract, is trading at 13 15/16, up 1, on a turnover of over 148,000 shares. Average daily volume over the last 13 weeks is 27,200 shares.
Equity Marketing provides design, marketing and promotional services to restaurant chains, oil and gas companies, and retailers. Such giveaways usually involve toys, figurines, beverage containers and fashion accessories licensed from popular TV shows, movies and the sports arena.
Equity Marketing has a 12-year relationship with Burger King, which represents nearly 2/3 of its $188 million of annual sales.
Both Burger King and Equity Marketing declined comment.
Dan Dorfman does not trade the market. His stock market investments are limited to broad-based mutual funds.
¸ 1999 JagNotes.com, Inc. All rights reserved.
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