In an amended 13D filing yesterday on Topps Co. Inc. (TOPP), 6.6% holder Crescendo Partners and its representative on the Board of Directors, Arnaud Ajdler, delivered a letter to the other members of the Board expressing their belief that the $9.75 per share merger transaction announced this morning with Michael Eisner's The Tornante Company and Madison Dearborn Partners is not in the best interests of the Company's shareholders and does not maximize shareholder value.
Mr. Ajdler believes that the merger consideration is inadequate and that the process that led to the signing of the Merger Agreement was flawed. Mr. Ajdler further states in the letter that he and Crescendo Partners II intend to actively solicit votes and campaign against the proposed transaction.
Shares of Topps are trading at $9.77 per share, pennies above the $9.75 offer.
A Coy of the Letter
Dear Fellow Members of the Board:
I am writing to you to express my thoughts regarding the Agreement and Plan ofMerger, dated March 5, 2007 (the "Merger Agreement") that The Topps Company,Inc. (the "Company") entered into with certain entities controlled by Michael D.Eisner and Madison Dearborn Partners (the "Buyers"). I voted against the Merger Agreement when it was submitted to a vote of the Company's Board of Directors because I believe that the proposed buyout is not in the best interests of the Company's shareholders and does not maximize shareholder value.
The merger consideration, in my belief, represents a discount to the fair value of the Company and is inadequate. Furthermore, I believe that the process that led to the signing of the Merger Agreement was flawed in that the Board of Directors did not shop the Company and thus failed to maximize the competitive dynamics of a sale transaction that would have garnered the highest price available. Instead of selling the Company for a premium of approximately 3%(1),the Board could have taken steps similar to those that are likely to be taken by the private equity buyers of the Company. As I have suggested on numerous occasions, the Company could return excess cash to shareholders, leverage its balance sheet, strengthen management, cut costs more aggressively and continue to grow the business for the benefit of the public shareholders.
As directors, we have fiduciary obligations to the Company and its shareholders to ensure that the Company takes all appropriate steps to maximize shareholder value. In accordance with my fiduciary duties as a director of Company, it is incumbent upon me to take any actions that I believe are necessary to prevent the consummation of a transaction that does not provide full and fair value to the Company's shareholders.
Since the Board of Directors has decided to pursue this transaction over the significant concerns which I have continually and repeatedly voiced to the Board, I intend to actively solicit votes and campaign against the proposed transaction. I will do this together with Crescendo Partners II, L.P., Series Y, a large shareholder of the Company of which I am a Managing Director.
Very Truly Yours,