Just a day after being ‘encouraged’ to do so, Topps has re-scheduled a vote on the proposed sale of the company.
Topps is again postponing a shareholder vote on the proposed sale to a group of private equity firms headed by former Disney CEO Michael Eisner. The new vote has been slated for August 30.
Topps is still recommending shareholders support its proposed deal with Eisner’s Tornante Company and Madison Dearborn Partners but it is still listening to an offer from Upper Deck after the California rival made a fresh $425 million tender offer several weeks ago.
In June, Topps delayed a vote on the private equity-backed offer, after a Delaware Chancery Court judge ruled that the company had to provide more information on the proposed sale and allow Upper Deck to make a tender offer.
The vote announcement by the country’s oldest maker of sports cards comes a day after Crescendo Parters, otherwise known as ‘The Committee to Enhance Topps’ filed a letter with the Securities and Exchange Commission Monday, claiming the Board of Directors’ leadership is stalling.
The group, which owns the largest number of Topps shares, asked for the company’s annual meeting to be conducted within two months and for a vote on a new Board of Directors. They also threatened to contact the Delaware judge who issued an injunction against Topps earlier this summer. Crescendo said it would "replace senior management and conduct a modified "Dutch Auction" tender offer in order to fix the Company’s capital structure."
Crescendo Partners believes that Topps’ shares could be worth a minimum of (net of debt) between $16 and $18 per share in two years, superior to the Tornante Group’s $10.75 bid currently being considered.
Topps also claims to still be considering a bid by Upper Deck.
Here is the letter:
July 30, 2007
BY EMAIL AND FACSIMILE
Board of Directors of The Topps Company, Inc.
c/o Mr. Steven Gartner
Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, New York 10019
Dear Members of the Topps Board:
As you know, Crescendo Partners II, L.P., Series Y ("Crescendo Partners"), the largest stockholder of The Topps Company, Inc. (the "Company"), is soliciting proxies against the ill-advised Eisner merger because we believe the price is inadequate and the sale process was flawed. Crescendo Partners is also seeking to replace the existing Topps Board at the Company’s next annual meeting. To that end, Crescendo Advisors LLC has duly nominated a slate of highly qualified business executives who, if elected, would replace senior management and conduct a modified "Dutch Auction" tender offer in order to fix the Company’s capital structure. Crescendo Partners believes that Topps’ shares could be worth an enterprise value (net of debt) between $16 and $18 per share in two years, not taking into account an M&A premium that could yield a higher valuation. We are writing to you because we are becoming increasingly concerned that the so-called Executive Committee of the Topps Board does not have any intention of holding its 2007 annual meeting in a timely fashion in accordance with Section 211 of the Delaware General Corporation Law ("Section 211").
We note that historically The Topps Company, Inc. (the "Company") has held its annual meeting on or around July 1st. Last year, the Company originally scheduled its contested annual meeting for June 28, 2006. The meeting was adjourned and ultimately held on August 25, 2006 due to special circumstances. Under Section 211, it is incumbent upon the Topps Board to schedule the Company’s 2007 annual meeting to be held on a date that is within 13 months from the date of its last annual meeting at which directors were elected, or no later than September 25, 2007. The Company has neither publicly announced nor otherwise scheduled a date for its 2007 annual meeting.
The Company has also yet to announce a date for the special meeting originally scheduled to be held on June 28, 2007 to vote upon the proposal to approve the definitive merger agreement (the "Eisner Merger") by and among the Company, The Tornante Company LLC and Madison Dearborn Partners, LLC (the "Special Meeting"), which was initially delayed by the order of Vice Chancellor Strine after he found certain material omissions and other materially misleading statements in the proxy statement filed by the Company. At this point, we do not expect the Special Meeting to take place until late August or early September.
We hereby request that you include the election of directors as an agenda item in connection with the Special Meeting. The election of directors would be voted on by the Company’s stockholders at the Special Meeting in the event that the Eisner Merger is not approved. If, however, you now have reason to believe or it appears that the Special Meeting will be delayed beyond September 25, 2007, the 13-month anniversary of the conclusion of last year’s annual meeting, we request that you take immediate action to schedule the Company’s 2007 annual meeting to be held on a date no later than September 25, 2007. If the so-called Executive Committee of the Topps Board does not schedule a vote for the purpose of electing directors at an annual or special meeting held on or before September 25, 2007, we intend to promptly apply after the 13-month anniversary to the Delaware Court of Chancery to order an annual meeting to be held.
After enjoining the Special Meeting and concluding that the Company’s proxy statement is misleading to the Company’s stockholders, we cannot imagine Vice Chancellor Strine would be too pleased to learn once again that the Company has failed to comply with Delaware law.
Very truly yours,
/s/ Eric Rosenfeld
President and CEO