Nat Turner raises his offer to acquire PSA parent Collectors Universe

The sports card market is hot right now in many ways. A recent example is Nat Turner’s efforts to take Collectors Universe (Ticker: CLCT) private.

Grading has revolutionized cards and Professional Sports Authenticators (PSA) is by far the market leader. Collectors Universe (Ticker: CLCT) is the parent company of PSA. Collectors Universe was trading at about $25 per share pre-pandemic and then fell to about $15 in March 2020. As the sports card market took off though, the time it took PSA to grade cards took longer and longer, and the backlog of cards in their system grew tremendously. The market recognized this, and the stock rocketed to the mid-$60s right before the first acquisition offer.

Nat Turner and his investment group (including Mets’ owner Stephen A. Cohen) saw an opportunity and originally offered $75.25 per share (approx. $700 million) to acquire Collectors Universe. This was approximately three times what CLCT was trading at in early 2020, and about five times the March low price. The offer was approved by the board, but to go through, 50% of the shareholders had to agree to sell their shares at that price.

After the acquisition announcement, the stock traded above $75.25 in the stock market. This didn’t make sense if the acquisition was going to go through. Why pay more than $75.25 for the right to receive $75.25? Market participants thought it was worth more than the acquisition offer. Either a higher bidder was going to emerge, or Nat Turner and his investment group would be forced to increase their offer price. Although shareholders were offered a substantial premium to the early 2020 stock price, they thought that the company was worth more than $75.25, and didn’t want to tender their shares.

On January 20th, Nat Turner raised his offer to $92 per share (approx. $853 million), saying this is his “best and final” offer. Again, this has been approved by the board. We’ll see if shareholders are willing to sell at this new price. (The stock is trading a little below $92 in the market which makes sense. Traders essentially believe the $92 acquisition will go through.) There are a couple big shareholders though who own more than 5% of the company who still say the offer is too low. They believe their shares are worth more than $100. If 50% of shareholders don’t tender now, theoretically Nat Turner will walk away and PSA will remain in the hands of a public company.

Let’s see what happens!