Upper Deck had made its desire to make a bid known in 2005, before
Although these arguments are not without color, they are not vibrant
enough to convince me that they would sustain a finding of breach of
compromised a proxy fight in 2006, with the insurgents clearly prevailing.
made some other serious expression of interest, as it had several years
earlier.FN22 The fact that it did not, inclines me toward the view that the
debate occurred between the two members of the Ad Hoc Committee who
were Incumbent Directors, Greenberg and Feder, and the two who were
Thus, although Shorin had put out a letter before the settlement of the
proxy fight indicating that a “quick fix” sale was not in the interests of
stockholders, the pot was stirred and ravenous capitalists should have
been able to smell the possibility of a deal. Certainly that was true of Upper
Deck, which is Topps’s primary competitor. Now, of course, Upper Deck
says that its overtures were rebuffed by Lehman, Topps’s banker, a year
earlier. But one must assume that Upper Deck is run by adults. As Topps’s
leading competitor, it knew the stress the Dissident Directors would be
exerting on Shorin to increase shareholder value. If Upper Deck wanted to
(e.g., the trite lunch at the Four Seasons), written a bear hug letter, or
defendants are likely correct in arguing that Upper Deck was focused on
acquiring and then digesting another company, Fleer, during 2005 and
2006, and therefore did not make an aggressive run at (a clearly reluctant)
Topps in those years.FN23
FN22. See Declaration of Andrew Gasper (June 12, 2007), Ex. A.
FN23. See Affidavit of Christopher E. Morris (June 8, 2007) at ¶¶ 3–4;
damage Topps, strikes me, on this record, as a reasonable one.
In coming to that conclusion, I am also influenced by the fluctuating views
Greenberg had breached his fiduciary duties by mentioning a supposedly
low ball $10 per share price to Eisner without board authority, and
Eisner ever made a formal bid, and was turned away.
Ajdler harbored that concern because two other bidders who had looked
closely at Topps had withdrawn expressions of interest in buying at much
lower prices. There is therefore nothing to this argument. Furthermore, I
cannot find that Greenberg’s move was unreasonable or poorly motivated.
The price he mentioned was a substantial one, and Greenberg actually
someone has to make a move toward specificity. I am unpersuaded that
after trial I would find Greenberg’s to have been unreasonable.
Likewise, I am not convinced that the Incumbent Directors treated the
Dissident Directors in a manner that adversely affected the ability of the
board to obtain the highest value. The Dissident Directors were full of
times expressed impatience with Ajdler and Brog, that impatience was
understandable given the frequency, tenor, and shifting nature of the input
received. To that point, I note that Greenberg stepped aside when the
Dissident Directors claimed that his prior relationships with Eisner tainted
him as a negotiator. Those prior relationships do not strike me as
Ajdler refused and then acted as a backseat driver by carping at Feder
through e-mails.
In the end, I perceive no unreasonable flaw in the approach that the Topps
board took to negotiating the Merger Agreement with Eisner. I see no
evidence that another bidder who expressed a serious interest to get in the
per share-not their desired goal but a respectable price, especially given
Topps’s actual earnings history and the precarious nature of its business.
Critical, of course, to my determination is that the Topps board recognized
that they had not done a pre-signing market check. Therefore, they
secured a 40-day Go Shop Period and the right to continue discussions
terminated and accepted another deal–an eventuality more likely to occur
after the Go Shop Period expired than during it-was around 4.3% of the
total deal value. Although this is a bit high in percentage terms, it includes
Eisner’s expenses, and therefore can be explained by the relatively small
size of the deal. At 42 cents a share, the termination fee (including
and match right).
Although a target might desire a longer Go Shop Period or a lower break
fee, the deal protections the Topps board agreed to in the Merger
Agreement seem to have left reasonable room for an effective post-signing
market check. For 40 days, the Topps board could shop like Paris Hilton.
Superior Proposal after the Period expired and resume the process.
In finding that this approach to value maximization was likely a reasonable
one, I also take into account the potential utility of having the proverbial
bird in hand. Although it is true that having signed up with Eisner at $9.75
likely prevented Topps from securing another deal at $10, the $9.75 bird in
some form of “sucker‘s insurance” for considering a bid higher than that.
Human beings, for better or worse, like cover. We tend to feel better about
being wrong, if we can say others made the same mistake. Stated more
positively, recognizing our own limitations, we often, quite rationally, take
comfort when someone whose acumen and judgment we respect validates
Eisner deal bolsters this conclusion. Although the facts on this point are
less than clear, as discussed, Topps appears to have had rational reason
to be suspicious of Upper Deck’s sincerity. Upper Deck had made
proposals before, but had often appeared flaky. Moreover, Upper Deck
was only expressing an interest in the Entertainment Business, not the
issuance of an injunction on the alleged unreasonableness of the Topps’s
board decision to sign up the Merger Agreement. I now turn to the more
troubling claims raised, which are about the board’s conduct after the
Merger Agreement was consummated.
The parties have presented competing versions of the events surrounding
hardly as receptive as one would expect in a situation where it received an
unsolicited overture from a competitor who had long expressed interest in
buying Topps in a friendly deal and who, given the likely synergies
involved in a combination of the two businesses, might, if serious about
doing a deal, be able to pay a materially higher price than a financial buyer
pledged to retain management and would continue Shorin and his family in
an influential role.
At the same time, Upper Deck hardly moved with the speed expected of an
interested buyer that has a limited time in which to secure a deal. Rather,
Upper Deck initially acted in a manner that created rational questions
was not the same as the other bidders and Topps had good reason to be
skeptical of Upper Deck’s intentions. Topps had to balance its concerns
about the possibility that Upper Deck might use the Go Shop process as a
pretext for gaining access to Topps’s proprietary information with the
possibility that Upper Deck might be willing to make higher bid than
Deck claims (hotly disputed by Topps) to have made a blind, unsolicited
bid for Topps at $11 a share in 2005. If it was able to make a blind bid
then, why not in 2007?
FN25. In this same vein, Topps’s primary contractual arguments, which are
based on the express, and allegedly implied, terms of the Standstill
had no such belief because it asked for an express contractual provision to
that effect and was denied. Upper Deck’s more colorable contract claim is
that Topps’s breached the Standstill Agreement by publicly discussing-and
disparaging-Upper Deck’s bid. Upper Deck contends that, as a result, it
should be excused from performance under the Standstill Agreement in
rights to prevent Upper Deck from responding to Topps’s disclosures or
from allowing it to take a non-coercive tender offer directly to Topps’s
stockholders, I need not resolve that contractual question.
In any event, I need not obsess over the behavior of the parties during the
Go Shop Period. Upper Deck did finally make a formal bid for Topps at
cash.FN26
FN26. Revlon, 506 A.2d at 184 n. 16; QVC, 637 A.2d at 34.
Because of the final-hour nature of the bid, the Topps board had to
determine whether to treat Upper Deck as an Excluded Party under the
Merger Agreement so that it could continue negotiations with it after the
transaction. Underlying Topps’s skepticism of the seriousness of Upper
Deck’s proposal was perhaps the suspicion that Upper Deck was willing to
pay $12 million simply to blow up Topps’s deal with Eisner. Topps had to
consider the possibility that Upper Deck was afraid that Eisner, by
leveraging his reputation in the entertainment community, might be able to
placing virtually all of the antitrust risk on Topps. True, Topps had been
down this road itself before, and won, but the lack of any more substantial
antitrust assurance in Upper Deck’s initial bid arguably gave Upper Deck
Ajdler harbored that concern because two other bidders who had looked
closely at Topps had withdrawn expressions of interest in buying at much
lower prices. There is therefore nothing to this argument. Furthermore, I
cannot find that Greenberg’s move was unreasonable or poorly motivated.
The price he mentioned was a substantial one, and Greenberg actually
someone has to make a move toward specificity. I am unpersuaded that
after trial I would find Greenberg’s to have been unreasonable.
Likewise, I am not convinced that the Incumbent Directors treated the
Dissident Directors in a manner that adversely affected the ability of the
board to obtain the highest value. The Dissident Directors were full of
times expressed impatience with Ajdler and Brog, that impatience was
understandable given the frequency, tenor, and shifting nature of the input
received. To that point, I note that Greenberg stepped aside when the
Dissident Directors claimed that his prior relationships with Eisner tainted
him as a negotiator. Those prior relationships do not strike me as
Ajdler refused and then acted as a backseat driver by carping at Feder
through e-mails.
In the end, I perceive no unreasonable flaw in the approach that the Topps
board took to negotiating the Merger Agreement with Eisner. I see no
evidence that another bidder who expressed a serious interest to get in the
per share-not their desired goal but a respectable price, especially given
Topps’s actual earnings history and the precarious nature of its business.
Critical, of course, to my determination is that the Topps board recognized
that they had not done a pre-signing market check. Therefore, they
secured a 40-day Go Shop Period and the right to continue discussions
terminated and accepted another deal–an eventuality more likely to occur
after the Go Shop Period expired than during it-was around 4.3% of the
total deal value. Although this is a bit high in percentage terms, it includes
Eisner’s expenses, and therefore can be explained by the relatively small
size of the deal. At 42 cents a share, the termination fee (including
and match right).
Although a target might desire a longer Go Shop Period or a lower break
fee, the deal protections the Topps board agreed to in the Merger
Agreement seem to have left reasonable room for an effective post-signing
market check. For 40 days, the Topps board could shop like Paris Hilton.
Superior Proposal after the Period expired and resume the process.
In finding that this approach to value maximization was likely a reasonable
one, I also take into account the potential utility of having the proverbial
bird in hand. Although it is true that having signed up with Eisner at $9.75
likely prevented Topps from securing another deal at $10, the $9.75 bird in
some form of “sucker‘s insurance” for considering a bid higher than that.
Human beings, for better or worse, like cover. We tend to feel better about
being wrong, if we can say others made the same mistake. Stated more
positively, recognizing our own limitations, we often, quite rationally, take
comfort when someone whose acumen and judgment we respect validates
Eisner deal bolsters this conclusion. Although the facts on this point are
less than clear, as discussed, Topps appears to have had rational reason
to be suspicious of Upper Deck’s sincerity. Upper Deck had made
proposals before, but had often appeared flaky. Moreover, Upper Deck
was only expressing an interest in the Entertainment Business, not the
issuance of an injunction on the alleged unreasonableness of the Topps’s
board decision to sign up the Merger Agreement. I now turn to the more
troubling claims raised, which are about the board’s conduct after the
Merger Agreement was consummated.
The parties have presented competing versions of the events surrounding
hardly as receptive as one would expect in a situation where it received an
unsolicited overture from a competitor who had long expressed interest in
buying Topps in a friendly deal and who, given the likely synergies
involved in a combination of the two businesses, might, if serious about
doing a deal, be able to pay a materially higher price than a financial buyer
pledged to retain management and would continue Shorin and his family in
an influential role.
At the same time, Upper Deck hardly moved with the speed expected of an
interested buyer that has a limited time in which to secure a deal. Rather,
Upper Deck initially acted in a manner that created rational questions
was not the same as the other bidders and Topps had good reason to be
skeptical of Upper Deck’s intentions. Topps had to balance its concerns
about the possibility that Upper Deck might use the Go Shop process as a
pretext for gaining access to Topps’s proprietary information with the
possibility that Upper Deck might be willing to make higher bid than
Deck claims (hotly disputed by Topps) to have made a blind, unsolicited
bid for Topps at $11 a share in 2005. If it was able to make a blind bid
then, why not in 2007?
FN25. In this same vein, Topps’s primary contractual arguments, which are
based on the express, and allegedly implied, terms of the Standstill
had no such belief because it asked for an express contractual provision to
that effect and was denied. Upper Deck’s more colorable contract claim is
that Topps’s breached the Standstill Agreement by publicly discussing-and
disparaging-Upper Deck’s bid. Upper Deck contends that, as a result, it
should be excused from performance under the Standstill Agreement in
rights to prevent Upper Deck from responding to Topps’s disclosures or
from allowing it to take a non-coercive tender offer directly to Topps’s
stockholders, I need not resolve that contractual question.
In any event, I need not obsess over the behavior of the parties during the
Go Shop Period. Upper Deck did finally make a formal bid for Topps at
cash.FN26
FN26. Revlon, 506 A.2d at 184 n. 16; QVC, 637 A.2d at 34.
Because of the final-hour nature of the bid, the Topps board had to
determine whether to treat Upper Deck as an Excluded Party under the
Merger Agreement so that it could continue negotiations with it after the
transaction. Underlying Topps’s skepticism of the seriousness of Upper
Deck’s proposal was perhaps the suspicion that Upper Deck was willing to
pay $12 million simply to blow up Topps’s deal with Eisner. Topps had to
consider the possibility that Upper Deck was afraid that Eisner, by
leveraging his reputation in the entertainment community, might be able to
placing virtually all of the antitrust risk on Topps. True, Topps had been
down this road itself before, and won, but the lack of any more substantial
antitrust assurance in Upper Deck’s initial bid arguably gave Upper Deck