Topps still isn’t comfortable with Upper Deck’s buyout bid but claims it is still willing to listen.
The Topps Company, Inc. today announced that its Board of Directors, after "careful consideration and in consultation with its financial and legal advisors", determined that the pending Upper Deck tender offer is "not in the best interest of Topps stockholders" and unanimously recommends that stockholders reject the offer and not tender their shares.
Topps noted that the terms of the Upper Deck tender offer are substantially similar to the acquisition proposals submitted by Upper Deck to Topps on April 12, 2007 and May 21, 2007. Topps further noted that, notwithstanding the Board’s recommendation, the Company intends to continue discussions with Upper Deck to see if a consensual transaction that is superior to the pending transaction with The Tornante Company LLC and Madison Dearborn Partners, LLC can be reached. Topps cautions, however, that there can be no assurance that a superior transaction will be reached with Upper Deck.
On July 2, Upper Deck filed with the Federal Trade Commission and the Department of Justice the documentation necessary to commence the initial 15-day antitrust regulatory review period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSR Act") with respect to the tender offer. This review period is scheduled to expire on July 17, 2007. While the Topps Board reaffirmmed its recommendation that Topps stockholders vote "FOR" the pending Tornante-Madison Dearborn transaction, the Topps Board intends to revisit the Upper Deck offer after the expiration of the HSR Act waiting period and "reserves the right to revise its recommendation with respect to the tender offer in the event of any changed circumstance."
In making its determination, the Topps Board considered a number of factors, including, but not limited to, the following:
— Antitrust regulatory risk. The Topps Board has concerns about the
ability of an acquisition of Topps by Upper Deck to receive the
required antitrust regulatory approvals under the HSR Act without being
substantially delayed, being prevented from closing altogether or
resulting in the imposition of conditions that could adversely impact
the value of the combined businesses in a way that would impede Upper
Deck’s ability to obtain financing for the transaction or that would
cause the conditions to the consummation of the offer to not be
— Highly conditional offer. Upper Deck is not required to complete the
tender offer, and although the offer is not subject to a financing
condition, it is subject to a number of other conditions, many of which
are absent from the pending merger agreement with Tornante and Madison
Dearborn, as well as from the consensual acquisition proposals
previously submitted to Topps by Upper Deck. In addition, many of the
conditions to consummation of the tender offer are highly subjective.
These conditions include, but are not limited to:
– obtaining all required domestic and foreign antitrust regulatory
– the satisfaction of Upper Deck, in its sole discretion, of its
pending due diligence review of Topps;
– a significantly more restrictive "material adverse change" ("MAC")
condition concerning Topps’ business, as compared to the
corresponding MAC condition contained in the Tornante-Madison
Dearborn merger agreement, as well as in the consensual acquisition
proposals previously submitted to Topps by Upper Deck. Among other
things, Upper Deck may determine — in its judgment — whether a
material adverse change has occurred or may occur. The MAC condition
also covers a number of matters and events that are customarily not
deemed to be material adverse changes (which exclusions are contained
in the Tornante-Madison Dearborn merger agreement and Upper Deck’s
previously submitted consensual acquisition proposals);
– conditions relating to the effects of certain economic and
geopolitical events, which have the effect of indirectly shifting the
risk of Upper Deck failing to obtain the financing necessary to
consummate the offer to Topps stockholders, even though the offer is
not subject to a financing condition; and
– termination of the Tornante-Madison Dearborn merger agreement, which
would effectively require Topps to pay a $12 million breakup fee and
up to $4.5 million in expense reimbursement to Tornante and Madison
Dearborn without a binding transaction with Upper Deck in place.
On March 5, Topps entered into a definitive merger agreement to be acquired by The Tornante Company LLC and Madison Dearborn Partners, LLC for $9.75 per share in cash. As previously disclosed by the Company, all required domestic and foreign antitrust regulatory approvals relating to the pending Tornante-Madison Dearborn transaction have been obtained. On June 25, 2007, Upper Deck launched a tender offer to purchase all of the outstanding shares of Topps stock for $10.75 per share in cash.