Upper Deck has announced it has pulled its offer for Topps off the table and sent a scathing letter to Topps management. Is a lawsuit next?
The Upper Deck Company announced Tuesday night that it has terminated its previously announced tender offer for all outstanding shares of The Topps Company, Inc.
Upper Deck was critical of Topps, saying the New York-based card maker had "erected a series of hurdles" that made it impossible to strike a deal.
The move could clear the way for Topps to complete its pending merger with the Micheal Eisner-led private equity group which made a $385 million offer for the company earlier this year. Upper Deck’s bid was approximately $425 million, or $1 per share higher, but Topps management made it clear from the beginning that it preferred the deal with Eisner’s group. Most key company executives are expected to keep their jobs should shareholders approve the transaction at a meeting next week.
Topps said in a letter to Upper Deck CEO Richard McWilliam on Tuesday that despite its efforts, it had not been able to reach a consensual agreement and had no assurance of reaching one. Upper Deck had said it was still interested in acquiring Topps but was "frustrated" by the company’s actions.
Upper Deck sent Topps a letter later in the day, advising that it had terminated the tender offer, calling Topps’ position on the sale "conflicting and bizarre."
The two sides had bickered over whether Topps had supplied its rival with the appropriate financial information. Upper Deck’s letter said that the "information necessary to assess the value of the assets and complete the merger agreement
continues to be withheld, including player association and league
agreements (and) pricing matrixes."
"It is Topps, not UD, which is responsible for this cynically contrived game of
cat-and-mouse," Upper Deck wrote. "We — apparently like others in the
marketplace — have concluded that Topps has no interest in pursuing
in good faith a transaction with UD."
"These roadblocks have been created by Topps as part of a deliberate effort to discredit UD It is now abundantly clear that Topps will attempt to impede any and all reasonable efforts to consummate the UD merger, which thus cannot possibly be consummated under the current circumstances."
Upper Deck also claimed it reserved "all of its rights to seek redress against Topps and those responsible for the collapse of this transaction, which would have been in the best interest of Topps’ shareholders…the people to whom you owe a fiduciary duty."
The announcement comes on the same day that the dissenting shareholders pushing for a ‘no’ vote on the sale to Eisner’s group announced that a second independent proxy advisory firm, Glass Lewis, recommended that Topps’ stockholders vote against the proposed $9.75 Merger.
In reaching its decision, Glass Lewis stated in a news release: "We are deeply troubled by the process the board undertook in arriving at the proposed deal, and agree with the Dissident that it did not constitute a full sales process. In our opinion, interested suitors are likely to put forward their best offers only when they are forced to compete. Here, we see that the board only held discussions and negotiations with three bidders, including Tornante-Madison Dearborn, and deliberately chose to refrain from initiating a public sale despite opposition. We believe this decision essentially precluded Topps from enjoying the benefits of true competitive bidding, a process which we believe likely to maximize shareholder value."