Upper Deck's Bid for Topps Not its First Try

A Delaware judge issued an injunction late last week, stopping the proposed vote on a sale/merger between Topps and a private equity group headed by Michael Eisner.

The 69-page decision rendered by Vice Chancellor Leo Strine also revealed that Upper Deck began making advances toward Topps as early as 1999, just ten years after the California company released its first set of baseball cards. Upper Deck and Topps disagree over whether the same effort was made in 2003 and 2004, but in 2005, Upper Deck again approached Topps about a friendly takeover. Each time, however, Topps rebuffed their rival. Strine called Upper Deck's earlier attempts "flaky", however. Only the proposed deal with Eisner's group "forced Upper Deck to get serious," Strine wrote.

Upper Deck won the first round of court battles with the injunction and will now apparently get to tell its side of the story regarding its dealings with Topps. On Monday morning, Topps postponed the scheduled June 28 meeting at which shareholders were scheduled to vote on the propsed sale to the Eisner group.

Topps will also grant a waiver today releasing The Upper Deck Company from its standstill obligations to Topps so that Upper Deck may communicate directly with Topps stockholders and pursue a tender offer on the terms described in the Court's decision. A new date for the special meeting will be set as soon as practicable in order to give Topps stockholders an opportunity to evaluate the Tornante-Madison Dearborn transaction in light of any competing offer from Upper Deck.

In a news release, Topps stated its Board of Directors "remains committed to obtaining the best possible outcome for all of its stockholders and has not withdrawn or amended its recommendation with respect to the merger agreement with Tornante and Madison Dearborn."

Eisner's Tornante Co. and Madison Dearborn Partners LLC offered $9.75 per share, or $384.5 million. The board of New York-based Topps accepted the offer in March. Upper Deck last month said it would pay $10.75 per share, or $416 million.

Strine says Topps "clearly abandoned any pretense of trying to secure the highest price reasonably available" by ignoring Upper Deck's current bid. Topps has made no secret it prefers the Eisner group's bid. Strine agreed with Upper Deck's contention that Topps prefers not to sell to a rival company, in part to keep chairman Arther Shorin and members of his family in key management positions.

At a hearing last week,lawyers for Upper Deck told Strine that Topps investors weren't told that "assurances were made to management about keeping their jobs" as part of the bid made by Eisner's group.

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