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SPAC investor sues to block shareholder vote ahead of $1.3 bln Topps union

3 minute read

REUTERS/Clodagh Kilcoyne

  • Investor sues SPAC to block "improper" vote over charter amendments
  • Amendments include a share increase needed to close pending $1.3 bln merger
  • The SPAC has agreed to merge with sports card company Topps

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(Reuters) - Mudrick Capital Acquisition Corp II investor sued the blank check company to prevent a vote that could change how shareholders approve a share issuance needed to close its merger with sports trading card seller The Topps Co Inc.

Shareholder Lawrence Bass said in a proposed class action filed in Wilmington, Delaware, on Tuesday that the board of the special purpose acquisition company was trying to have different classes of shareholders vote together on a plan to increase the company’s shares in violation of Delaware law.

The investor’s counsel did not respond to a request for comment on Tuesday. Neither did representatives for the SPAC, its sponsor or Topps.

The Mudrick SPAC and Topps announced in April that they planned to merge in a deal that valued the combined company at $1.3 billion. Topps is a sports and entertainment collectibles business.

For the transaction to close, Mudrick’s shareholders must approve the blank check company’s plans to increase its number of Class A shares from 100 million to 350 million, according to the complaint.

Bass said that the SPAC’s charter currently allows Class A and Class B shareholders to vote separately, but the company is trying to change its charters to call for a combined vote.

Because the SPAC’s sponsor, investment firm Mudrick Capital Management, controls 20% of the company voting power, Bass said a combined vote could “significantly improve the Amendment’s odds of passage.”

“Shareholder voting rights cannot be dispensed with so cavalierly, and certainly not simply to advance the Sponsor’s interests, with whom all five board members are affiliated,” Bass said.

The lawsuit said that the share increase ultimately benefits the sponsor, while diluting the value of other investors’ stakes. Bass claimed that the SPAC sponsor could stand to lose $80 million if the merger is not completed.

Among the SPAC directors named in the suit is board Chairman and CEO Jason Mudrick, who is also Mudrick Capital Management’s chief investment officer.

The case is Lawrence Bass v. Mudrick Capital Acquisition Corporation II et all, Delaware Court of Chancery, No. 2021-0690.

For Bass: Steven Purcell, Douglas Julie and Robert Lefkowitz of Purcell Julie & Lefkowitz; and David Jenkins, Neal Belgam and Kelly Green of Smith, Katzenstein & Jenkins.

Counsel information for the SPAC and its board members was not immediately known.

Read more:

Sports card firm Topps to go public through $1.3 bln SPAC deal

Sierra Jackson reports on legal matters in major mergers and acquisitions, including deal work, litigation and regulatory changes. Reach her at sierra.jackson@thomsonreuters.com

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