Topps, which on March 5 agreed to a deal with The Tornante Co. and Madison Dearborn Partners to be acquired for $9.75 per share, has received an unsolicited buyout offer of $10.75 per share from Upper Deck. The Topps BOD had previously opted not to pursue a similar offer by Upper Deck. Tornante and Madison Dearborn have granted Topps a waiver under their existing merger agreement that permits the company to negotiate with Upper Deck, which it intends to do (Topps Co.
). In L.A., Dawn Chmielewski notes Upper Deck “initially expressed interest during a 40-day period when Topps was soliciting higher bids.” At the time, Topps’ regulatory filings identified Upper Deck “only as ‘the principal competitor’ interested in acquiring its rival.” Topps “ended talks after its investment bank, Lehman Bros., concluded the unnamed party did not have the proper financial arrangements in place to complete the deal.” It also “raised questions about whether such consolidation would pass regulatory muster.” Sources said that Upper Deck’s bid for Topps “could be either a serious attempt to corner the sports card market or a way to crawl inside its rival’s books” (L.A. TIMES, 5/25
REAX: Wedbush Morgan Securities analyst Sean McGowan said, “If the Upper Deck offer firms up, we believe there is a good chance that (Tornante) will raise its bid to meet or exceed the $10.75 offer” (N.Y. POST, 5/25). More McGowan: “Upper Deck sees an opportunity to buy its biggest competitor in baseball cards and realize substantial profits from putting the two operations together.” In San Diego, Jennifer Davies notes MLB last year cut the trading-card companies it had licensing deals with to Topps and Upper Deck. Sources said that the move has “spurred increased interest in baseball cards as the two companies pumped up the marketing and promotions for their respective baseball-card offerings” (SAN DIEGO UNION-TRIBUNE, 5/25). Beckett Media CEO Peter Gudmundsson said that some “fear putting the $700[M]-a-year baseball card industry in a single company’s hands could be bad for the business.” Gudmundsson: “Monopolies don’t benefit anyone but the monopolist” (USA TODAY, 5/25).