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Baseball card and Bazooka gum maker Topps Co. is in the midst of one of the most dramatic deals of the year, a battle between two suitors that has led to accusations of favoritism and a hostile tender offer. Back in March, Topps agreed to be acquired by Tornante Co., a private equity firm controlled by former Walt Disney Co. Chief Executive Officer Michael Eisner, and Madison Dearborn Partners, a private equity fund. As part of that deal, Topps managers were given assurances they would keep their jobs, a provision that’s more common in deals involving financial buyers, such as private equity funds, that don’t have their own management teams already in place. Meanwhile, Upper Deck, a rival sports memorabilia company, had also been negotiating to purchase Topps � and wanted to make sure the playing field was fair. “Upper Deck, as a strategic buyer, wanted to be treated in the same way as a financial buyer, which may result in a better price for the shareholder of Topps,” said Bertha Willner, a partner at Liner Yankelevitz Sunshine & Regenstreif, which represented Upper Deck. Topps’ shareholders also wanted to make sure they were getting the best deal. In March, shareholders sued the Topps directors for not complying with their fiduciary duty to get the best price. “We felt the way they went about approving the Eisner transaction was completely inadequate when we became aware of Upper Deck,” said Seth Rigrodsky, a Wilmington, Del.-based lawyer at Rigrodsky & Long who represented the shareholders. “We think the defendants impermissibly favored Eisner over Upper Deck because it was clear that Upper Deck was going to throw out Topps’ management.” Upper Deck filed its own lawsuit, challenging the process Topps went through in connection with the sale and seeking to be let out of a standstill agreement. That agreement, a required part of their negotiations, restricted Upper Deck from taking its own proposal to the stockholders. On June 14, a Delaware judge granted a preliminary injunction, prohibiting Topps from having a stockholders’ meeting on the Eisner deal until it released Upper Deck from the standstill agreement. The ruling also said that shareholders should have more information on Eisner’s deal as it related to managements’ jobs, as well as information on Upper Deck’s offer, before the vote. That ruling was “quite remarkable” in the fairly conservative Delaware Court, Rigrodsky said, adding “it reflects the court looking at relationships between the corporate offices and executives and the potential conflicts they might have. It also reflects the view that shareholders should have a free and unfettered right to accept a higher price transaction if the company is going to be sold.” Now, Upper Deck has launched a tender offer, or a direct offer to the shareholders of the company, which expires on July 24. At the same time, it is also trying to negotiate a consensual deal with Topps management. The Eisner-led group’s agreement in March offered Topps $9.75 per share in cash, while Upper Deck’s June tender offer is for $10.75 per share in cash, an offer worth about $425 million � $40 million more than the other group’s. With Willner, Upper Deck’s team of Liner Yankelevitz attorneys included partner Joshua Grode, senior counsel Monica Nguyenduc and associates Sam Kozhaya and Zachary Smith. Rigrodsky represented Topps’ shareholders. Topps’ lawyers are from Willkie Farr & Gallagher as well as the Delaware firm Richards, Layton & Finger. Three attorneys at those firms could not be reached for comment by The Recorder’s deadline. Potter Anderson & Corroon in Delaware is counsel to Tornante and Michigan Dearborn Partners.

Kellie Schmitt

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