Growing public

Insider: Anton Rabie

The IPO advantage: "Being public you get more deal flow," says Spin Master Corp. co-CEO Anton Rabie.

Who Anton Rabie, co-CEO Spin Master Corp. (TSX:TOY), a Toronto-based children’s toys, games and entertainment company. Spin Master’s best-known brands include Bakugan and Air Hogs; its latest TV series, Paw Patrol, is broadcast in over 160 countries. Rabie co-founded Spin Master in 1994 with co-CEO Ronnen Harary. Nine-month 2015 revenue was US$620 million, including US$386 million in the third quarter.

Involvement Spin Master had an initial public offering on July 30, raising more than $250 million. The proceeds mainly retired debt, but Rabie, who oversees the company’s acquisitions pipeline, says Spin Master expects to leverage its public listing to step up its buying as well.

Listed You’re newly public, projecting double-digit annual growth, and in Q3 revenue and income were up more than 30%. That’s a good pace for a 20-year-old business.

Anton Rabie There is so much room to grow for our organization. Our consumer, globally, is more homogenous than other categories. Because of the Internet and YouTube and everything, the world has become flat when it comes to kids. And especially when it comes to entertainment. Take, for example, Paw Patrol right now. It’s resonating in dozens and dozens of countries and it can cross boundaries literally overnight. All of sudden Paw Patrol gets broadcast, it starts to resonate and then we start shipping the product. That’s allowing the company to really scale.

Listed What are your primary areas of growth?

Anton Rabie One is the core brands. We’re actually experiencing growth in the majority of our core businesses. The second part is entertainment. That was what I was telling you about with Paw Patrol. The third part is international, where we’re going into countries where we’ve never done business, or where if we have a wholly owned office, like Italy, Germany, France, we’re increasing the number of doors.

Listed What about the IPO experience? Any surprises?

Anton Rabie The greatest surprise I’ve had is how nothing changed. You hear so much about how being public changes you, and you know, for me, the most important thing was keeping the culture of the company and the values. I had this fear, I was just like wondering, what’s going to happen tomorrow? And it didn’t happen. When I walk around the company, I feel an identical energy, culture and values.

Listed You just bought Cardinal Industries, a U.S. game company. How important are these deals to Spin Master?

Anton Rabie They’re critical. It was a big reason why we went public.

Listed Can you explain that?

Anton Rabie If you take the last 30 years of Mattel and Hasbro and you chart the inflection moments of the companies—how did they go from a billion to two billion and so on—what you notice is that in our industry, acquisitions have proven to be instrumental for transformational growth, and for buying quality reoccurring revenue and great brands.

Now for us, being public also means you can acquire companies and you can keep the entrepreneur completely engaged. A lot of times in corporate America they buy companies and the entrepreneur never lasts. We’re the inverse. We buy companies and the entrepreneur has more fun. The way we see it is, we buy company X, the entrepreneur stays on and runs the development or the design or the marketing—the rainmaking/revenue generating side of the business—and we take over the back end. Every deal’s a little different, but that’s a key part of the formula.

Listed Do you expect to do more deals now that you’re public?

Anton Rabie Yep. We’ll be doing several a year. Being public you get more deal flow. And when you go into adjacent categories, they know who you are. The minute we go outside the core of toy and we start looking at acquisitions, it’s a huge benefit. There’s just so much information about the company, you jump right into the next step quicker.

Listed What are you looking to buy, what sort of areas? Existing business? New geographies?

Anton Rabie We prefer to buy brands or intellectual properties rather than buying geography plays. We can hire people on the ground.

Listed Cardinal was a $50-million deal. Is that typical?

Anton Rabie The way I see things, we’d like to do three to five small deals a year, which are basically five-to-$50 million. In the smaller deals, the value creation is incredible. Because sometimes you buy something that’s in the U.S. that’s never existed outside, or vice versa, and when you plug it into our infrastructure, there is huge growth.

We’re not filling a quota, every one’s got to stand on its own and we’ve got to be patient. We just focus on the smaller to mid-size deals, and then the larger ones…that’s when you have to have the most patience. The real great brands, the transformational brands, they come up every couple of years.

Interview by Listed Staff

Photography: Spin Master Corp.

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