Another deal bites the dust

Mudrick Capital Acquisition Corporation II (MUDS: $9.83) said Friday its SPAC merger with The Topps Co. “has been terminated by mutual agreement” because of Major League Baseball’s decision to end a 70-year-old trading card deal with Topps. [See Press Release here]

The announcement for the Nasdaq-listed blank check company in a filing with the Securities and Exchange Commission came a day after news broke that MLB will not renew its trading card arrangement with Topps.

MLB is expected to give its trading card business to Fanatics, the sports retail company.

Topps’ special purpose acquisition company merger with Mudrick, which had been announced in April, valued Topps at $1.3 billion.

MLB has partnered with Topps on baseball cards since 1952, getting a royalty on cards the company sells.

Topps, which was founded in 1938, said Friday it will remain a private company.

“Topps expects to be able to produce substantially all its current licensed baseball products through 2025, pursuant to its existing agreements, and will build on the exceptional performance in the second quarter of 2021 in its Sports & Entertainment segment, and its Confections segment,” the company said.

Topps, which had been publicly traded before being taken private in 2007, retains licensing deals with Major League Soccer and the National Hockey League.

Murdrick’s full statement Friday said: “Mudrick Capital Acquisition Corporation II announced today that the Agreement and Plan of Merger with Topps Intermediate Holdco, Inc. and Tornante-MDP Joe Holding LLC has been terminated by mutual agreement, after notification on August 19, 2021 from Major League Baseball and the Major League Baseball Players Association that they would not be renewing their respective agreements with The Topps Company when they come up for renewal at the end of 2025 and 2022, respectively.”

Hedge-fund billionaire William Ackman, who launched the largest-ever special-purpose acquisition company with an aim of landing a big target to take public, may now return its funds to shareholders in the face of a lawsuit questioning the vehicle’s legality.

Mr. Ackman disclosed plans to unwind the $4 billion vehicle, Pershing Square Tontine Holdings Ltd. (PSTH: $19.73) , in a letter to its shareholders that was posted to his firm’s website.

“While we believe the lawsuit is meritless, the nature of the suit and our legal system make it unlikely that it can be resolved in the short term,” Mr. Ackman wrote, adding that it could also deter potential deal partners from working with the SPAC.

The move represents a further retreat after Pershing Square Tontine backed away from a deal to invest in Universal Music Group. The vehicle was launched last summer, and in June announced plans to buy a 10% stake in Universal Music from French media conglomerate Vivendi SE. The complicated move surprised some investors who expected more of a traditional SPAC deal, in which an empty shell raises funds in an IPO and then looks for a business to merge with and take public.

But Mr. Ackman dropped the plan the following month after failing to convince the U.S. Securities and Exchange Commission that the deal met the rules for such vehicles and some shareholders balked. Instead he said his investment firm, Pershing Square Holdings Ltd., would take a stake in Universal.

SPACs have exploded in popularity but Mr. Ackman’s difficulties in securing a deal come as the boom shows signs of waning, with regulators and investors increasingly questioning the vehicles.

Mr. Ackman now plans to focus on a novel investment structure he unveiled in conjunction with the Universal deal called a special-purpose acquisition rights company, or SPARC. Unlike a SPAC, which takes investor money upfront, the SPARC would give shareholders the right to buy into a deal when it is presented. It also wouldn’t be under pressure to complete a transaction within the typical two-year time frame.

Assuming SEC and New York Stock Exchange approval of the SPARC, which isn’t guaranteed, Pershing Square Tontine would return the capital it holds in trust. (Pershing Square Tontine investors would receive $20 a share and one SPARC warrant for each share they hold.)

Mr. Ackman wrote on Twitter Friday morning, “If you find yourself in a leaky boat, often times you are better off switching boats than patching leaks to complete the mission.”