Upper Deck Ends Topps Bid

Date: Thursday, August 23, 2007
Author: HFN Daily Report

In a move sure to disappoint hedge funds, baseball card manufacturer Upper Deck has withdrawn its offer for rival Topps.

Upper Deck had offered $10.75 per share for Topps, outbidding a consortium led by former Disney head Michael Eisner. New York-based hedge fund firms Crescendo Partners and Pembridge Capital wanted the company to pursue the higher bid, but last month the board of Topps voted unanimously to recommend shareholders reject the offer unless Upper Deck made it even better.

Crescendo and Pembridge started the battle for Topps last year when they waged a shareholders revolt pushing for an auction of the company. Instead of pursuing a full auction, however, the board entered into an agreement to be acquired by Eisner's investment company Tornante and private equity firm Madison Dearborn Partners for $9.75 per share.

The hedge fund firms had pinned their hopes on the Upper Deck offer and even filed a lawsuit charging Topps' board with breaching fiduciary duty by agreeing to the deal with Eisner. In past weeks, however, Upper Deck has grown cooler on its bid, complaining it was being frustrated by Topps' actions.

Upper Deck's offer was supposed to be valid until August 29, but the company ended its bid on Tuesday, saying it would return shares already tendered. In a scathing statement, Upper Deck said it had acted in good faith but that Topps had erected a series of hurdles designed to shut out rival bids. Under its agreement with the Eisner group, Topps would have had to pay a substantial break-up fee if it had accepted another offer.

Topps shareholders will meet on August 30 to approve the Eisner bid. Proxy advisers Institutional Shareholder Services and Glass Lewis have both recommended voting against the offer.