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too easy an out in the event that regulators raised even a minor objection
have believed that their financing and antitrust concerns were manageable
resolution in subsequent negotiating rounds. Topps could have gone back
the Topps's Incumbent Directors and their advisors, as revealed in this
record, does not suggest such a motivation. The decision of Brog to
directors seeking to get the best value for stockholders. Topps made no
reasonable counter-offer on the antitrust issue and failed to identify why
the transaction proposed a genuine antitrust concern. Instead, Topps
insisted that Upper Deck agree to accept any condition, however extreme,
proposed by antitrust regulators, and Topps never acknowledged its own
very limited remedial recourse if he breached, largely one senses, because
of the reputational damage Eisner would suffer if he failed to close, the
Topps board never seems to have taken into account the reputational
damage Upper Deck would suffer if it did the same, despite its knowledge
that Upper Deck has acquired other businesses in the past (remember
Silverstein are not skilled, competent, hard-working executives. More
important, it is often the case that founders (and sons of founders) believe
that their businesses stand for something more than their stock price.
Founders therefore often care how their family legacy-in the form of a
corporate culture that treats workers and consumers well, or a commitment
a single large-scale business organization. They derive their identity in part
from that organization and feel that they contribute to the identity of the
firm. The mission of the firm is not seen by those involved with it as wholly
economic, nor the continued existence of its distinctive identity as a matter
of indifference.”), aff'd, 571 A.2d 1140 (Del.1989).
Although Shorin and the other defendants claim that they truly desire to get
the highest value and want nothing more than to get a topping bid from
Upper Deck that they can accept, their behavior belies those protestations.
In reaching that conclusion, I rely not only on the defendants' apparent
failure to undertake diligent good faith efforts at bargaining with Upper
whose interests are not aligned with the corporation, to establish rules of
the game that promote an orderly auction, and to give the corporation
leverage to extract concessions from the parties who seek to make a
bid.FN28
FN28. Contemplate, for example, a final round auction involving three
But standstills are also subject to abuse. Parties like Eisner often, as was
done here, insist on a standstill as a deal protection. Furthermore, a
standstill can be used by a target improperly to favor one bidder over
another, not for reasons consistent with stockholder interest, but because
managers prefer one bidder for their own motives.
Upper Deck has shown a reasonable probability of success on its claim
that the Topps board is misusing the Standstill. As I have indicated, I
cannot read the record as indicating that the Topps board is using the
Standstill to extract reasonable concessions from Upper Deck in order to
unlock higher value. The Topps board's negotiating posture and factual
chance to accept a potentially more attractive higher priced deal, it keeps
them in the dark about Upper Deck's version of important events, and it
keeps Upper Deck from obtaining antitrust clearance, because it cannot
begin the process without either a signed merger agreement or a formal
tender offer.
conditional. Indeed, Upper Deck is not even asking for some sort of prior
restraint preventing the Topps board from implementing a rights plan in the
event of a tender offer (although Upper Deck has indicated that will begin
round two of this litigation if Topps does). What Upper Deck is asking for is
release from the prior restraint on it, a prior restraint that prevents Topps's
FN29. E.g., MacAndrews & Forbes Holdings, Inc. v. Revlon, Inc., 501 A.2d
1239, 1251 (Del.Ch.1985), aff'd, 506 A.2d 173 (Del.1986).
Similarly, Topps went public with statements disparaging Upper Deck's bid
and its seriousness but continues to use the Standstill to prevent Upper
Deck from telling its own side of the story. The Topps board seeks to have
System v. Crawford, 918 A.2d 1172, 1192 (Del.Ch.2007) (“Shareholders
would suffer irreparable harm [if they] were ... forced to vote without
knowledge of ... material facts.”); ODS Technologies, L.P. v. Marshall, 832
A.2d 1254, 1262 (Del.Ch.2003) (“The threat of an uninformed stockholder
vote constitutes irreparable harm.”); Pure Resources, 808 A.2d at 452
suggests no genuine desire by the board to use the Standstill for that
purpose, that danger is minimal. To address it, however, the injunction I
will issue will not allow Upper Deck to go backwards as it were. The
Merger vote will be enjoined until after Topps has granted Upper Deck a
waiver of the Standstill to: (1) make an all shares, non-coercive tender
Deck any relief from its obligations not to misuse Topps's confidential
information.
In reaching a remedy, I also take into account unsolicited correspondence I
received from the defendants today at a time when this decision was being
finalized for imminent issuance. That correspondence suggests that the
the record as it existed as of mid-day, I conclude that an injunction of the
kind I have outlined above remains in order. By its terms, that injunction
will not prevent Topps from keeping the Standstill in place but if it chooses
to do so, it will not be able to proceed with the Merger vote.
The other danger of an injunction of this kind is premised on a fear that
Upper Deck's higher-priced deal, taking into account its unique risks, over
Eisner's lower-priced deal, which has its own risks.FN31 If the Topps
board sees the Upper Deck tender offer and believes it should not be
accepted, it can tell the stockholders why. It can even consider the use of a
rights plan to prevent the tender offer's procession, if it can square use of
similar offers, or dissolution of the company becomes inevitable, the
directors cannot fulfill their enhanced Unocal duties by playing favorites
with the contending factions. Market forces must be allowed to operate
freely to bring the target's shareholders the best price available for their
equity.”); see also Robert M. Bass Group, Inc. v. Evans, 552 A.2d 1227,
For all these reasons, the moving parties' motion for a preliminary
injunction is GRANTED. The parties shall present an implementing order
no later than noon on June 18, 2007.
directors seeking to get the best value for stockholders. Topps made no
reasonable counter-offer on the antitrust issue and failed to identify why
the transaction proposed a genuine antitrust concern. Instead, Topps
insisted that Upper Deck agree to accept any condition, however extreme,
proposed by antitrust regulators, and Topps never acknowledged its own
very limited remedial recourse if he breached, largely one senses, because
of the reputational damage Eisner would suffer if he failed to close, the
Topps board never seems to have taken into account the reputational
damage Upper Deck would suffer if it did the same, despite its knowledge
that Upper Deck has acquired other businesses in the past (remember
Silverstein are not skilled, competent, hard-working executives. More
important, it is often the case that founders (and sons of founders) believe
that their businesses stand for something more than their stock price.
Founders therefore often care how their family legacy-in the form of a
corporate culture that treats workers and consumers well, or a commitment
a single large-scale business organization. They derive their identity in part
from that organization and feel that they contribute to the identity of the
firm. The mission of the firm is not seen by those involved with it as wholly
economic, nor the continued existence of its distinctive identity as a matter
of indifference.”), aff'd, 571 A.2d 1140 (Del.1989).
Although Shorin and the other defendants claim that they truly desire to get
the highest value and want nothing more than to get a topping bid from
Upper Deck that they can accept, their behavior belies those protestations.
In reaching that conclusion, I rely not only on the defendants' apparent
failure to undertake diligent good faith efforts at bargaining with Upper
whose interests are not aligned with the corporation, to establish rules of
the game that promote an orderly auction, and to give the corporation
leverage to extract concessions from the parties who seek to make a
bid.FN28
FN28. Contemplate, for example, a final round auction involving three
But standstills are also subject to abuse. Parties like Eisner often, as was
done here, insist on a standstill as a deal protection. Furthermore, a
standstill can be used by a target improperly to favor one bidder over
another, not for reasons consistent with stockholder interest, but because
managers prefer one bidder for their own motives.
Upper Deck has shown a reasonable probability of success on its claim
that the Topps board is misusing the Standstill. As I have indicated, I
cannot read the record as indicating that the Topps board is using the
Standstill to extract reasonable concessions from Upper Deck in order to
unlock higher value. The Topps board's negotiating posture and factual
chance to accept a potentially more attractive higher priced deal, it keeps
them in the dark about Upper Deck's version of important events, and it
keeps Upper Deck from obtaining antitrust clearance, because it cannot
begin the process without either a signed merger agreement or a formal
tender offer.
conditional. Indeed, Upper Deck is not even asking for some sort of prior
restraint preventing the Topps board from implementing a rights plan in the
event of a tender offer (although Upper Deck has indicated that will begin
round two of this litigation if Topps does). What Upper Deck is asking for is
release from the prior restraint on it, a prior restraint that prevents Topps's
FN29. E.g., MacAndrews & Forbes Holdings, Inc. v. Revlon, Inc., 501 A.2d
1239, 1251 (Del.Ch.1985), aff'd, 506 A.2d 173 (Del.1986).
Similarly, Topps went public with statements disparaging Upper Deck's bid
and its seriousness but continues to use the Standstill to prevent Upper
Deck from telling its own side of the story. The Topps board seeks to have
System v. Crawford, 918 A.2d 1172, 1192 (Del.Ch.2007) (“Shareholders
would suffer irreparable harm [if they] were ... forced to vote without
knowledge of ... material facts.”); ODS Technologies, L.P. v. Marshall, 832
A.2d 1254, 1262 (Del.Ch.2003) (“The threat of an uninformed stockholder
vote constitutes irreparable harm.”); Pure Resources, 808 A.2d at 452
suggests no genuine desire by the board to use the Standstill for that
purpose, that danger is minimal. To address it, however, the injunction I
will issue will not allow Upper Deck to go backwards as it were. The
Merger vote will be enjoined until after Topps has granted Upper Deck a
waiver of the Standstill to: (1) make an all shares, non-coercive tender
Deck any relief from its obligations not to misuse Topps's confidential
information.
In reaching a remedy, I also take into account unsolicited correspondence I
received from the defendants today at a time when this decision was being
finalized for imminent issuance. That correspondence suggests that the
the record as it existed as of mid-day, I conclude that an injunction of the
kind I have outlined above remains in order. By its terms, that injunction
will not prevent Topps from keeping the Standstill in place but if it chooses
to do so, it will not be able to proceed with the Merger vote.
The other danger of an injunction of this kind is premised on a fear that
Upper Deck's higher-priced deal, taking into account its unique risks, over
Eisner's lower-priced deal, which has its own risks.FN31 If the Topps
board sees the Upper Deck tender offer and believes it should not be
accepted, it can tell the stockholders why. It can even consider the use of a
rights plan to prevent the tender offer's procession, if it can square use of
similar offers, or dissolution of the company becomes inevitable, the
directors cannot fulfill their enhanced Unocal duties by playing favorites
with the contending factions. Market forces must be allowed to operate
freely to bring the target's shareholders the best price available for their
equity.”); see also Robert M. Bass Group, Inc. v. Evans, 552 A.2d 1227,
For all these reasons, the moving parties' motion for a preliminary
injunction is GRANTED. The parties shall present an implementing order
no later than noon on June 18, 2007.
