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that effect, and Greenberg's response seemed to agree that was a
possibility.
In finding that the Proxy Statement does not fairly address this issue, I do
not and need not make any finding that there was a purposeful intent on
This court is aware that one of the tasks of a diligent sell-side advisor is to
that Upper Deck may simply want to gain a competitive advantage by
I begin with Upper Deck's contentions regarding the fact that the Proxy
Statement states that that during the second proxy contest, there was a
general belief in the marketplace that Topps may be “willing to entertain
acquisition proposals.” The intended implication of that statement is, of
course, that all potential buyers knew that Topps's would entertain
and would not be considered by the Topps's board-i.e., that Topps was not
for sale. The plaintiffs contend that although Topps may secretly have
been willing to entertain unsolicited bids, Shorin discouraged bids by
making that statement. They say that a reasonable Topps stockholder
should therefore be reminded of that, given the spin Topps is putting on
The next point of contention actually involves the question of which side
made the first move toward a possible Topps-Upper Deck deal in 2007.
The Proxy Statement implies that Topps made contacting Upper Deck one
of its first priorities once the Go Shop Period commenced. What the Proxy
Statement omits to mention is that Upper Deck sent an expression of
Much more substantial are Upper Deck's arguments that the Proxy
Statement and other public statements of Topps have misrepresented the
two acquisition overtures Upper Deck has made to buy Topps following the
execution of the Eisner Merger Agreement. As explained, Topps has
publicly disclosed that it rejected Upper Deck's bid because of Upper
reverse break-up fee that Upper Deck has proposed. That is the same
remedy available to Topps if Eisner breaches. Topps did not make that
clear. That was materially misleading. So was the failure to disclose the
lack of a financing contingency.
Moreover, Upper Deck has now presented Topps with a letter from CIBC
Deck).
Topps's Proxy Statement also cites antitrust concerns and Upper Deck's
“unwillingness to sufficiently assume the risk associated with a failure to
obtain the necessary antitrust approval.” The Proxy Statement does not
disclose, however, that in Upper Deck's revised unsolicited bid that it
thing Upper Deck is unwilling to divest is its intellectual property, such as
the Topps or Upper Deck name. Despite having every urgent reason to do
so, Topps has identified no colorable argument as to why Upper Deck
would or should be asked to do that. And Topps does not even fairly
represent the substantial hell or high water provision offered by Upper
understandable. Fifty years ago, Topps bought its only competitor in the
sports cards industry. Later, in the 1960s and again in the 1970s-when it
was much harder to be an antitrust defendant-Topps was twice sued on
antitrust grounds. It won both cases and was not required to divest any of
its assets. FN17 In its papers and at oral argument, Topps could not
Topps, that a Topps-Upper Deck merger would be approved by the federal
antitrust regulators without so much as a second request for additional
information.FN18 One would expect in high-stakes litigation like this that a
well-heeled defendant like Topps would be able to present some credible
expert evidence to support its antitrust views, if those views were in fact
merger of McDonald's and Burger King constitute a hamburger monopoly
simply because the combined enterprise owned both the Whopper and Big
Mac names. As a matter of fair disclosure, it seems required for Topps to
admit that it was the winning party in the leading cases that Upper Deck
would cite if antitrust authorities questioned its acquisition of Topps. In that
Topps stockholders or from even responding to Topps's public statements
about the negotiations between the two rivals or the nature of Upper
Deck's bid.
E. Who's Telling The Truth?: The Parties' Debate About How Things
Actually Went Down
For their part, the Stockholder Plaintiffs mostly point to the numerous
disagreements Dissident Director Ajdler has with the Proxy Statement's
rendition of key events. In that regard, the Stockholder Plaintiffs dilate on
the Proxy Statement's failure to disclose just how close Greenberg's
relationship was with Eisner. They say that the Proxy Statement should
contentions, is not properly raised as a disclosure issue. On this record,
Ajdler's version of events is no more credible on these points than
Greenberg's. Indeed, if I had to choose, I would tend to find Ajdler's
insinuation that Greenberg was in Eisner's pocket unfounded. Even if
Greenberg asked Ajdler not to be on a call with Eisner for the reasons
against the Merger. He has been telling his version of events, ensuring that
the Topps stockholders hear his version and that of the other Dissident
Directors about a variety of issues, such as the dissolution of the Ad Hoc
Committee and the exclusion of the Dissident Directors from the committee
addressing the Go Shop Process and Upper Deck's bid. The Stockholder
directors who were actively involved in the negotiations with a series of
nuisance emails about the negotiations. Ajdler also questioned whether it
was advisable for Topps to use management's traditional law firm, Wilkie
Farr, to give the legal advice during the sales process, especially since
Wilkie Farr's chairman served on the Topps board.
Topps has been able to tell its story to the Topps stockholders.
For example, as indicated previously, the Proxy Statement notes that
Lehman had advised Topps in 2005 that because of the divergent nature
of Topps's Entertainment and Confectionary Businesses, there was no
“logical strategic buyer for the company.” But Upper Deck claims that it had
reiterated that desire in both 2003 and 2004, as well as in 2005. Topps
denies that Upper Deck contacted it in 2003 and 2004.
Topps and Upper Deck agree that in 2005, around the time Topps was
shopping its Confectionary Business, Upper Deck contacted Lehman
Brothers and expressed an interest in acquiring either the Entertainment
but gave up on pursuing a transaction after Topps informed CIBC that it
would not entertain an offer from Upper Deck for either the Entertainment
Business or the entire company, citing, among other things, antitrust
concerns. The Proxy Statement discloses only Topps's version of events.
Likewise, Upper Deck believes that the Proxy Statement misrepresents the
Director Brog. Because Brog was on vacation at the time and away from
his office, he did not receive the letter until about a week later, yet before
the Merger Agreement with Eisner was signed. Nonetheless, Topps opted
to sign that Merger Agreement before talking to Upper Deck. This move
was supported by Brog, who suggested that Topps contact Upper Deck
discussions between the two rivals did not begin until Upper Deck's
financial advisor, CIBC, made another unsolicited call to Lehman a few
days after the start of the Go Shop Period.
Upper Deck also denies Topps's contention that Upper Deck was slow in
its due diligence review of Topps and in formulating its $10.75 offer.
Deck, Topps initially placed only a skeletal amount of information in the
virtual data room that Upper Deck was using to conduct due diligence.
Then, after Upper Deck complained, Topps flooded the room with large
amounts of irrelevant information.
Topps has reasonable responses, pointing out that it gave Upper Deck the
Upper Deck is highly knowledgeable about the sports cards industry. To
that point, Topps claims that it would have been unreasonable for Upper
Deck to have expected Topps to divulge its most sensitive information to
its chief competitor without a more definitive commitment to purchase.
This sort of “he said, she said” stuff between a bidder and a target cannot
about who is right.FN19 But in this case, the Topps Incumbent Directors
have refused to release Upper Deck from the Standstill, even for the
limited purpose of communicating with the Topps stockholders.
FN19. See, e.g., Zaucha v. Brody, 1997 WL 305841, at *5 (Del.Ch.1997) (
“Assuming that one party's disclosures are not adequate, the court will
outside sources.”), aff'd 538 F.2d 39 (2d Cir.1976).
IV. The Essence of The Revlon Claims
The Revlon arguments advanced by the Stockholder Plaintiffs and Upper
Deck differ a bit in their focus. I begin with the Stockholder Plaintiffs'
Revlon arguments, which are premised on the notion that the Incumbent
find a buyer who was friendly to him and would guarantee that Shorin and
Silverstein, his son-in-law, would continue to play leading roles at Topps. If
Shorin didn't strike a deal to that effect before the 2007 annual meeting, he
faced the prospect of having a new board majority oust him and his son-in-
law from their managerial positions, and being relegated to a mere 7%
Topps board majority resisted the Dissidents' desire for a public auction of
Topps, and signed up a deal with Eisner without any effort to shop the
company beforehand. Not only that, the Stockholder Plaintiffs contend that
defendant Greenberg capped the price that could be extracted from Eisner
by making an ill-advised and unauthorized decision to mention to Eisner
forty days, the Stockholder Plaintiffs contend that that time period was too
short and that the break-up fee and match right provided to Eisner were, in
combination, too bid-chilling. Therefore, although Topps approached over
100 financial and strategic bidders to solicit their interest, the Stockholder
Plaintiffs say that effort was bound to fail from the get-go, especially given
contend that the Topps board's lack of responsiveness to its expression of
interest in presenting a bid at $10.75 per share evidences the
entrenchment motivations highlighted by the Stockholder Plaintiffs.
Upper Deck contends that the Topps board unjustifiably delayed its access
to, and the scope of, due diligence materials. Upper Deck argues that the
making a formal unsolicited bid at $10.75 per share, Upper Deck says it
met with further resistance, in the form of withheld due diligence and
unsubstantiated concerns about Upper Deck's ability and commitment to
closing a deal. Finally, Upper Deck found itself publicly criticized by the
Topps board for having failed to act as a diligent, serious bidder.
fiduciary duties so required.
According to Upper Deck (and the Stockholder Plaintiffs), by this pattern of
behavior, the Topps board majority has clearly abandoned any pretense of
trying to secure the highest price reasonably available. Instead of using the
Standstill Agreement for a proper value-maximizing purpose, the Topps
without the chance to accept a tender offer from Upper Deck at a price
higher than Eisner's offer.FN20
FN20. Consistent with its Revlon argument, Upper Deck also contends that
Topps has itself violated the Standstill Agreement. By falsely disparaging
Upper Deck's conduct and bid in public, Topps allegedly breached an
toward Upper Deck, Upper Deck contends that behavior constitutes
another example of a prior material breach, relieving it of its obligations
under the Standstill.
These are in essence, the key Revlon arguments made by the Stockholder
Plaintiffs and Upper Deck in support of their application for a preliminary
Statement; and (3) prevent Topps from using the Standstill Agreement to
preclude Upper Deck from publicly discussing its bid for Topps or from
making a non-coercive tender offer directly to the Topps stockholders. In
the previous sections, I addressed the moving parties' disclosure claims
and identified the additional and corrective disclosures that are required
Revlon claims; (2) they will suffer imminent irreparable harm if an
injunction is not granted; and (3) the balance of the equities weighs in favor
of issuing the injunction.FN21 I turn to those issues now, dividing the
analysis in two parts. First, I address the decisions of the Topps board
leading up to the signing of the Merger Agreement with Eisner. I then turn
auction before signing the Merger Agreement, that Greenberg capped the
price Eisner could be asked to pay by mentioning that a $10 per share
price would likely command support from the Incumbent Directors, that the
Incumbent Directors unfairly restricted the Dissident Director's ability to
participate in the Merger negotiation and consideration process, and that
the Incumbent Directors foreclosed a reasonable possibility of obtaining a
better bid during the Go Shop Period by restricting that time period and
granting Eisner excessive deal protections. For its part, Upper Deck
echoes these arguments, and supplements them with a contention that
I begin with Upper Deck's contentions regarding the fact that the Proxy
Statement states that that during the second proxy contest, there was a
general belief in the marketplace that Topps may be “willing to entertain
acquisition proposals.” The intended implication of that statement is, of
course, that all potential buyers knew that Topps's would entertain
and would not be considered by the Topps's board-i.e., that Topps was not
for sale. The plaintiffs contend that although Topps may secretly have
been willing to entertain unsolicited bids, Shorin discouraged bids by
making that statement. They say that a reasonable Topps stockholder
should therefore be reminded of that, given the spin Topps is putting on
The next point of contention actually involves the question of which side
made the first move toward a possible Topps-Upper Deck deal in 2007.
The Proxy Statement implies that Topps made contacting Upper Deck one
of its first priorities once the Go Shop Period commenced. What the Proxy
Statement omits to mention is that Upper Deck sent an expression of
Much more substantial are Upper Deck's arguments that the Proxy
Statement and other public statements of Topps have misrepresented the
two acquisition overtures Upper Deck has made to buy Topps following the
execution of the Eisner Merger Agreement. As explained, Topps has
publicly disclosed that it rejected Upper Deck's bid because of Upper
reverse break-up fee that Upper Deck has proposed. That is the same
remedy available to Topps if Eisner breaches. Topps did not make that
clear. That was materially misleading. So was the failure to disclose the
lack of a financing contingency.
Moreover, Upper Deck has now presented Topps with a letter from CIBC
Deck).
Topps's Proxy Statement also cites antitrust concerns and Upper Deck's
“unwillingness to sufficiently assume the risk associated with a failure to
obtain the necessary antitrust approval.” The Proxy Statement does not
disclose, however, that in Upper Deck's revised unsolicited bid that it
thing Upper Deck is unwilling to divest is its intellectual property, such as
the Topps or Upper Deck name. Despite having every urgent reason to do
so, Topps has identified no colorable argument as to why Upper Deck
would or should be asked to do that. And Topps does not even fairly
represent the substantial hell or high water provision offered by Upper
understandable. Fifty years ago, Topps bought its only competitor in the
sports cards industry. Later, in the 1960s and again in the 1970s-when it
was much harder to be an antitrust defendant-Topps was twice sued on
antitrust grounds. It won both cases and was not required to divest any of
its assets. FN17 In its papers and at oral argument, Topps could not
Topps, that a Topps-Upper Deck merger would be approved by the federal
antitrust regulators without so much as a second request for additional
information.FN18 One would expect in high-stakes litigation like this that a
well-heeled defendant like Topps would be able to present some credible
expert evidence to support its antitrust views, if those views were in fact
merger of McDonald's and Burger King constitute a hamburger monopoly
simply because the combined enterprise owned both the Whopper and Big
Mac names. As a matter of fair disclosure, it seems required for Topps to
admit that it was the winning party in the leading cases that Upper Deck
would cite if antitrust authorities questioned its acquisition of Topps. In that
Topps stockholders or from even responding to Topps's public statements
about the negotiations between the two rivals or the nature of Upper
Deck's bid.
E. Who's Telling The Truth?: The Parties' Debate About How Things
Actually Went Down
For their part, the Stockholder Plaintiffs mostly point to the numerous
disagreements Dissident Director Ajdler has with the Proxy Statement's
rendition of key events. In that regard, the Stockholder Plaintiffs dilate on
the Proxy Statement's failure to disclose just how close Greenberg's
relationship was with Eisner. They say that the Proxy Statement should
contentions, is not properly raised as a disclosure issue. On this record,
Ajdler's version of events is no more credible on these points than
Greenberg's. Indeed, if I had to choose, I would tend to find Ajdler's
insinuation that Greenberg was in Eisner's pocket unfounded. Even if
Greenberg asked Ajdler not to be on a call with Eisner for the reasons
against the Merger. He has been telling his version of events, ensuring that
the Topps stockholders hear his version and that of the other Dissident
Directors about a variety of issues, such as the dissolution of the Ad Hoc
Committee and the exclusion of the Dissident Directors from the committee
addressing the Go Shop Process and Upper Deck's bid. The Stockholder
directors who were actively involved in the negotiations with a series of
nuisance emails about the negotiations. Ajdler also questioned whether it
was advisable for Topps to use management's traditional law firm, Wilkie
Farr, to give the legal advice during the sales process, especially since
Wilkie Farr's chairman served on the Topps board.
Topps has been able to tell its story to the Topps stockholders.
For example, as indicated previously, the Proxy Statement notes that
Lehman had advised Topps in 2005 that because of the divergent nature
of Topps's Entertainment and Confectionary Businesses, there was no
“logical strategic buyer for the company.” But Upper Deck claims that it had
reiterated that desire in both 2003 and 2004, as well as in 2005. Topps
denies that Upper Deck contacted it in 2003 and 2004.
Topps and Upper Deck agree that in 2005, around the time Topps was
shopping its Confectionary Business, Upper Deck contacted Lehman
Brothers and expressed an interest in acquiring either the Entertainment
but gave up on pursuing a transaction after Topps informed CIBC that it
would not entertain an offer from Upper Deck for either the Entertainment
Business or the entire company, citing, among other things, antitrust
concerns. The Proxy Statement discloses only Topps's version of events.
Likewise, Upper Deck believes that the Proxy Statement misrepresents the
Director Brog. Because Brog was on vacation at the time and away from
his office, he did not receive the letter until about a week later, yet before
the Merger Agreement with Eisner was signed. Nonetheless, Topps opted
to sign that Merger Agreement before talking to Upper Deck. This move
was supported by Brog, who suggested that Topps contact Upper Deck
discussions between the two rivals did not begin until Upper Deck's
financial advisor, CIBC, made another unsolicited call to Lehman a few
days after the start of the Go Shop Period.
Upper Deck also denies Topps's contention that Upper Deck was slow in
its due diligence review of Topps and in formulating its $10.75 offer.
Deck, Topps initially placed only a skeletal amount of information in the
virtual data room that Upper Deck was using to conduct due diligence.
Then, after Upper Deck complained, Topps flooded the room with large
amounts of irrelevant information.
Topps has reasonable responses, pointing out that it gave Upper Deck the
Upper Deck is highly knowledgeable about the sports cards industry. To
that point, Topps claims that it would have been unreasonable for Upper
Deck to have expected Topps to divulge its most sensitive information to
its chief competitor without a more definitive commitment to purchase.
This sort of “he said, she said” stuff between a bidder and a target cannot
about who is right.FN19 But in this case, the Topps Incumbent Directors
have refused to release Upper Deck from the Standstill, even for the
limited purpose of communicating with the Topps stockholders.
FN19. See, e.g., Zaucha v. Brody, 1997 WL 305841, at *5 (Del.Ch.1997) (
“Assuming that one party's disclosures are not adequate, the court will
outside sources.”), aff'd 538 F.2d 39 (2d Cir.1976).
IV. The Essence of The Revlon Claims
The Revlon arguments advanced by the Stockholder Plaintiffs and Upper
Deck differ a bit in their focus. I begin with the Stockholder Plaintiffs'
Revlon arguments, which are premised on the notion that the Incumbent
find a buyer who was friendly to him and would guarantee that Shorin and
Silverstein, his son-in-law, would continue to play leading roles at Topps. If
Shorin didn't strike a deal to that effect before the 2007 annual meeting, he
faced the prospect of having a new board majority oust him and his son-in-
law from their managerial positions, and being relegated to a mere 7%
Topps board majority resisted the Dissidents' desire for a public auction of
Topps, and signed up a deal with Eisner without any effort to shop the
company beforehand. Not only that, the Stockholder Plaintiffs contend that
defendant Greenberg capped the price that could be extracted from Eisner
by making an ill-advised and unauthorized decision to mention to Eisner
forty days, the Stockholder Plaintiffs contend that that time period was too
short and that the break-up fee and match right provided to Eisner were, in
combination, too bid-chilling. Therefore, although Topps approached over
100 financial and strategic bidders to solicit their interest, the Stockholder
Plaintiffs say that effort was bound to fail from the get-go, especially given
contend that the Topps board's lack of responsiveness to its expression of
interest in presenting a bid at $10.75 per share evidences the
entrenchment motivations highlighted by the Stockholder Plaintiffs.
Upper Deck contends that the Topps board unjustifiably delayed its access
to, and the scope of, due diligence materials. Upper Deck argues that the
making a formal unsolicited bid at $10.75 per share, Upper Deck says it
met with further resistance, in the form of withheld due diligence and
unsubstantiated concerns about Upper Deck's ability and commitment to
closing a deal. Finally, Upper Deck found itself publicly criticized by the
Topps board for having failed to act as a diligent, serious bidder.
fiduciary duties so required.
According to Upper Deck (and the Stockholder Plaintiffs), by this pattern of
behavior, the Topps board majority has clearly abandoned any pretense of
trying to secure the highest price reasonably available. Instead of using the
Standstill Agreement for a proper value-maximizing purpose, the Topps
without the chance to accept a tender offer from Upper Deck at a price
higher than Eisner's offer.FN20
FN20. Consistent with its Revlon argument, Upper Deck also contends that
Topps has itself violated the Standstill Agreement. By falsely disparaging
Upper Deck's conduct and bid in public, Topps allegedly breached an
toward Upper Deck, Upper Deck contends that behavior constitutes
another example of a prior material breach, relieving it of its obligations
under the Standstill.
These are in essence, the key Revlon arguments made by the Stockholder
Plaintiffs and Upper Deck in support of their application for a preliminary
Statement; and (3) prevent Topps from using the Standstill Agreement to
preclude Upper Deck from publicly discussing its bid for Topps or from
making a non-coercive tender offer directly to the Topps stockholders. In
the previous sections, I addressed the moving parties' disclosure claims
and identified the additional and corrective disclosures that are required
Revlon claims; (2) they will suffer imminent irreparable harm if an
injunction is not granted; and (3) the balance of the equities weighs in favor
of issuing the injunction.FN21 I turn to those issues now, dividing the
analysis in two parts. First, I address the decisions of the Topps board
leading up to the signing of the Merger Agreement with Eisner. I then turn
auction before signing the Merger Agreement, that Greenberg capped the
price Eisner could be asked to pay by mentioning that a $10 per share
price would likely command support from the Incumbent Directors, that the
Incumbent Directors unfairly restricted the Dissident Director's ability to
participate in the Merger negotiation and consideration process, and that
the Incumbent Directors foreclosed a reasonable possibility of obtaining a
better bid during the Go Shop Period by restricting that time period and
granting Eisner excessive deal protections. For its part, Upper Deck
echoes these arguments, and supplements them with a contention that
