Spin Master will use cash and debt to acquire Melissa & Doug

Chicago, Oct. 11 – Spin Master Corp. said that it would fund the initial $950 million purchase price for Melissa & Doug with $450 million of balance sheet cash and debt financing of $500 million, according to a press release and an investor presentation.

Spin Master is expecting the debt interest cost will be around 7%, the company said in the related investor call.

There is an additional earnout consideration of $150 million contingent on the achievement of certain financial targets post-close, namely the financial performance in 2024 and 2025.

The earnout would be funded from cash generated from ongoing operations.

The acquisition is expected to close in the first quarter of 2024, subject to customary regulatory approvals and closing conditions.

At closing, Spin Master projects that net leverage will be below 1x adjusted EBITDA.

Evercore Group LLC, RBC Capital Markets and TD Securities are serving as financial advisers to Spin Master and Torkin Manes LLP and Pillsbury Winthrop Shaw Pittman LLP are serving as its legal counsel. Harris Williams & Co is serving as financial adviser to Melissa & Doug and Fried, Frank, Harris, Shriver & Jacobson LLP are serving as its legal counsel.

Spin Master is a children’s entertainment company based in Toronto. Melissa & Doug is a Wilton, Conn.-based specialty toy brand with an educational focus.

Sara Rosenberg contributed to this story.

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