Topps responds to Upper Deck's plan to drop tender offer

By Lisa Kerner

Charlotte, N.C., Aug. 8 - The Topps Co., Inc. said it is "surprised" and "frustrated" by the lack of response from the Upper Deck Co. to Topps' attempt to negotiate a consensual transaction.

In a letter to Upper Deck, Topps noted the company's failure to notify Topps of the Hart-Scott-Rodino waiting period expiration on Aug. 3. More importantly, Upper Deck failed to respond to Topps' revised merger agreement.

The letter was included as part of a form 8-K filing with the Securities and Exchange Commission.

Upper Deck's $10.75-per-share tender offer for Topps' common stock is set to expire at midnight ET on Aug. 10. However, Upper Deck has expressed "an unwillingness to proceed with its tender offer" despite having gone to court over the matter and now prefers to proceed with a one-step merger, according to Topps.

Topps said such a move "would require several months, expose our stockholders to transaction risk during that time and, giving effect to the time value of money, reduce the value of the consideration received by our stockholders."

Topps said its directors are skeptical of Upper Deck's true intentions and question if the company is "simply taking steps to interfere with the current transaction with Tornante-MDP and otherwise harm Topps' business."

In addition, after a call to Upper Deck, Topps believes the company's hesitancy to complete the tender offer is due to its financing with CIBC. The original offer was not contingent on financing, the filing stated.

Despite Upper Deck's actions, Topps said it remains willing to finalize the terms of a definitive agreement with the company and outlined its preferred process: finalize the agreement for a two-step transaction, confirm Upper Deck's financing and both companies must finalize any remaining diligence.

As previously reported, Topps' board has not withdrawn its recommendation for the March 5 merger agreement with the Tornante Co., LLC and Madison Dearborn Partners, LLC. The agreement calls for Topps shareholders to receive $9.75 per share. Shareholders are expected to vote on the transaction at a special meeting on Aug. 30.

New York-based Topps creates and markets sports and related cards, entertainment products and confectionery. Upper Deck is a sports and entertainment publishing company based in Carlsbad, Calif.

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