BREAKING UPDATE – Tetris Collection – NES – Buyout Offer

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Today we will be looking at the buyout offer Otis received for their NES Tetris Collection with a voting deadline of Thursday, September 16th at 5 PM ET.

Tetris Collection – NES

About the Asset

This is a collection of two different NES games, Tetris (1989) and Tetris 2 (1993). The Tetris series is one of the best-selling video game series of all-time and the original Game Boy came with a copy of Tetris.

Both copies are graded as a 9.8 A++ (functionally the highest grade WATA gives out) – the copy of Tetris is a Rev A, Oval SOQ R, 4 line warranty, 9 digit Zip variant and the copy of Tetris 2 is a Rev A, Oval SOQ R, 3 line warranty, 9 digit zip variant. The variants don’t seem to make a huge difference, but many of the recent sales are of the Oval SOQ TM variant which are earlier versions.

It IPO’d on January 29th, 2021 with 1,620 shares at $10/share for a market cap of $16,200. The current trading price is $13.03/share ($21,108 market cap), with the lowest ask at $17.50/share ($28,350).

About the Offer

Otis has received an offer of $23,000 ($14.22/share), which is 42% above the IPO price and 9% above the last trading price.

Recent Sales History and Valuation

The two most recent sales of Tetris came last month at Heritage, with a 9.4 A+ selling for $4,200 and a 9.4 A selling for $3,120. These both imply around a $13,500-$14,000 valuation. There have been a few Ebay sales of low-rated versions that imply a slightly higher valuation but the error bars are bigger on those and I’m comfortable with the two recent auction sales setting the market. However, there is a premium applied to 9.8 rated copies and even more so when we’re talking about 9.8 A++ as they will be the highest rated copies of a given game. I think that’s enough to boost the value to around $16,000-$18,000.

There haven’t been any recent sales of Tetris 2, but going on past data Tetris sells for about 4x what Tetris 2 does, implying a total value of around $20,000-$22,500.

Inferred value – $20,000-$22,500 ($12.34 – $13.89 / share)

Verdict

I do not own shares, but if I did, I would vote NO. The offer is reasonably fair, but I think an offer has to be very high in order to accept a buyout, especially given the upwards trajectory of the video game market. If you want to unload your shares, you can get a similar value on the secondary market.

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Author

Adam Katz

Adam Katz

Adam is a lawyer and real estate investor with a finance background. His diverse job experience includes stints in a MLB front office, a major global law firm and the real estate investment fund he co-founded. He is bringing his well-honed research and valuation skills to the world of fractional investing. Born and raised in San Francisco, he currently lives in Brooklyn with his dog, a pit bull mix named Beaux.

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