NEW YORK, Aug. 24 -- The Topps Company, Inc. (Nasdaq: TOPP) announced today that it is mailing the following letter to stockholders urging them to vote "for" the $9.75 per share cash merger with Tornante - Madison Dearborn Partners:
IT'S TIME TO VOTE "FOR" THE $9.75 PER SHARE CASH MERGER
UPPER DECK'S ILLUSORY OFFER IS GONE
CRESCENDO'S PLAN IS RISKY AND COULD JEOPARDIZE
THE VALUE OF YOUR INVESTMENT IN TOPPS
August 24, 2007
Dear Fellow Stockholder:
We regret that the Upper Deck tender offer turned out to be a sham.
Stockholders, nevertheless, have an opportunity to vote on the $9.75 per
share cash merger with Tornante - Madison Dearborn Partners. While there has
been a lot of noise surrounding this transaction, we think there are three key
issues for you to consider in making your decision:
1. Unfortunately, the Upper Deck tender offer turned out to be illusory.
In an effort to get more money for our stockholders, we devoted
significant time and resources to reaching an agreement with Upper
Deck. It is now clear that Upper Deck was never prepared to pay you
$10.75 per share.
2. The Tornante - MDP transaction at $9.75 per share in cash is real and
provides stockholders with full and fair value for their shares.
3. We believe Crescendo is trying to prevent you from receiving $9.75 per
share in cash for all your shares. If Crescendo wants control of
Topps, they should pay you for it. We believe Crescendo has made both
misleading and contradictory statements to advance its self-serving
objective.
Please take the time to read this letter which explains why we believe the
Tornante - MDP transaction maximizes stockholder value and why Crescendo is
not acting in your best interest. The Board recommends that stockholders vote
"FOR" the $9.75 per share cash merger.
THE TORNANTE - MDP TRANSACTION AT $9.75 PER SHARE
MAXIMIZES STOCKHOLDER VALUE
In our opinion, these are the FACTS you should consider:
-- The $9.75 per share cash price equates to a multiple of 13.1 times
Topps EBITDA for fiscal year 2007, which is good value for stockholders
and compares favorably to comparable transactions for entertainment and
confectionery companies.
-- The all-cash Tornante - MDP transaction offers stockholders certainty
of value, as the transaction has a high probability of closing shortly
after stockholder approval.
-- The attractive price is due, in large part, to the unusually high level
of equity Tornante and MDP committed to the transaction - $191 million
or 54%.
-- The transaction was very attractive at the time of signing, and is even
more compelling today, considering, among other things, the current
turmoil in the credit markets.
-- Management's successful restructuring program was instrumental in
obtaining the attractive $9.75 per share cash offer.
-- The $9.75 per share cash offer is the ONLY REAL offer received as a
result of an extensive and thorough value-maximization process that
started over two years ago.
-- No attractive offer emerged during the attempted sale of the
Confectionery business.
-- Tornante - MDP emerged as a very motivated and credible bidder
throughout the sale process.
-- Two other sophisticated and highly experienced private equity investors
conducted a due diligence review of Topps. One bidder declined to
proceed and the other indicated that its bid would not be at a premium
over the then current share price of $8.73.
-- The Board proactively contacted 107 potential bidders (including Upper
Deck) during the "go-shop" solicitation period to perform a thorough
market check, but no superior proposal emerged.
The recent Delaware Chancery Court Opinion validated the Board's process in
negotiating the $9.75 per share cash merger:
"Most important, I do not believe that the substantive terms of the Merger
Agreement (with Tornante - MDP) suggest an unreasonable approach to value
maximization. The Topps board did not accept Eisner's $9.24 bid. They got him
up to $9.75 per share -- not their desired goal but a respectable price,
especially given Topps's actual earnings history and the precarious nature of
its business."
CRESCENDO IS WRONG - ITS "PLAN" IS FRAUGHT WITH RISK
In an effort to get you to forego receiving the premium provided by the
Tornante - MDP transaction, we believe Crescendo is recklessly making
projections of Topps' future performance. Crescendo is not credible in telling
you that Topps can achieve profit margins in line with companies of the likes
of Hershey, Wrigley and Cadbury Schweppes:
-- Topps' Confectionery business is a sub-scale player at a substantial
disadvantage in an increasingly competitive industry.
-- Profitability of the Confectionery business depends mostly on
successful new product introductions and the placement of products at
the very competitive front-end points of sales.
-- The U.S. Sports Trading Cards market has declined over the last decade,
and the growth of Topps' Entertainment business rests heavily on
bringing kids back to sports cards collecting and the successful
turnaround of WizKids.
Crescendo has not given stockholders any indication as to how it would address
these fundamental business issues, nor has it identified a new management team
to implement its "plan." As a matter of fact, in the many months since
Crescendo's nominee, Arnaud Ajdler, has been on the Topps Board, he has not
shared with us a single idea to improve Topps' business operations.
DON'T LET CRESCENDO MISGUIDE YOU WITH ITS EMPTY CAMPAIGN PROMISES.
ITS CLAIMS ON VALUE ARE NOT CREDIBLE.
Crescendo wants you to believe that its "plan" - which by its own admission
would take years to implement -- would result in a valuation for Topps that
represents a 100 percent increase over Topps' stock price on March 2, 2007,
the day before Topps announced the Tornante - MDP transaction. We find this
boast simply not credible.
Furthermore, we believe Crescendo's proposal to have Topps purchase less than
one-third of your and your fellow stockholders' shares at $10.00 to $10.50 per
share using Topps' own balance sheet is inferior to an all cash merger at
$9.75 per share for all Topps shares.
While Crescendo is talking today about astronomical prices for your shares
years into the future, they are contradicting their very own prior comments
about Topps' valuation.
The FACTS are evident in the public record:
-- As the Delaware Chancery Court noted in its Opinion, in November 2006,
Mr. Ajdler suggested that a price target of $10.00 per share might
dissuade potential bidders: "Dissident Director Ajdler was upset that
[Steven] Greenberg mentioned a $10 per share price [to Michael Eisner]
without Ad Hoc Committee approval. But he based his concern on the fact
that a price that high may scare off Eisner." (Tornante - MDP was
bidding $9.24 per share at the time)
-- Earlier this year, Mr. Ajdler recommended a special dividend in lieu of
a buyback because, in his opinion, the then prevailing trading price
did not justify a buyback.
Given Crescendo's contradictory statements, Topps stockholders should ask
themselves:
-- If Crescendo really believes it can create significantly greater value
than what can be achieved today through the $9.75 per share cash
merger, why hasn't Crescendo made an offer to acquire all of Topps'
outstanding stock?
-- If Crescendo believes it has a better team and a better "plan" to
realize this value, then why hasn't Crescendo described it in detail to
stockholders and identified its management team?
-- Why wouldn't Crescendo tell you or Topps if it would accept Upper
Deck's $10.75 tender offer?
We believe Crescendo's motivation is clear -- taking control of Topps for
FREE -- giving Crescendo control of Topps may prevent stockholders from EVER
maximizing the value of their investment. If Crescendo wants control of Topps
they should pay you for it.
YOUR VOTE IS IMPORTANT
Approval of the $9.75 per share cash merger at the special meeting requires
the affirmative vote of a majority of the shares of Topps outstanding common
stock. The failure to vote or abstaining from voting has the same effect as
a vote against the merger agreement. Accordingly, please sign, date and return
the enclosed WHITE proxy card promptly in the envelope provided to vote FOR
the merger. To ensure your shares are voted and received in time to be
counted, vote by telephone or internet today.
Thank you for your support.
Sincerely,
Allan Feder Arthur T Shorin
/s/ Allan Feder /s/ Arthur T Shorin
Lead Director Chairman and Chief Executive Officer
If you have any questions or need assistance in voting your shares, please
contact our proxy solicitor.
Mackenzie Partners, Inc.
105 Madison Avenue
New York, New York 10016
(212) 929-5500 (Call Collect)
or
Call Toll-Free (800) 322-2885
Email: proxy@mackenziepartners.com
About Topps
Founded in 1938, Topps is a leading creator and marketer of distinctive confectionery and entertainment products. The Company's confectionery brands include "Ring Pop," "Push Pop," "Baby Bottle Pop" and "Juicy Drop Pop" lollipops as well as "Bazooka" bubble gum. Topps entertainment products include trading cards, sticker album collections and collectible games. For additional information, visit www.topps.com.
This release contains forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Although Topps believes the expectations contained in such forward- looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. This information may involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, factors detailed in Topps' Securities and Exchange Commission filings available at http://www.sec.gov, the SEC's Web site. Free copies of Topps' SEC filings are also available on Topps' Web site at www.Topps.com or by contacting the company's proxy solicitor, Mackenzie Partners, Inc. at topps@mackenziepartners.com.