M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

Thursday, July 19, 2007

Upper Deck Tries to Buy Time

On Tuesday, The Upper Deck Company announced that had withdrawn its Hart-Scott-Rodino Antitrust Improvements Act notification filing related to its proposed acquisition of The Topps Company, Inc.  Upper Deck stated at that time that it plans to re-file its notification today, July 19, 2007.  Upper Deck had originally filed its HSR notification on July 2, 2007.  By re- filing its notification with the FTC, Upper Deck now has another full 15 day period to discuss the transaction, and answer any questions raised by the FTC, the agency reviewing the HSR filing.  Assuming Upper Deck does file today, the waiting period under the HSR Act will expire at 11:59 pm ET on August 3, 2007, unless this period is earlier terminated or extended.

Upper Deck stated that "its decision to withdraw and re-file its notification was prompted in part by the July 4th holiday and by additional factors outside of its control."  Sometimes, companies withdraw and refile HSR notifications to correct or update information.  But refilings also sometimes occur when companies want to give the FTC or DOJ more time to review the transaction in the hopes of avoiding a second request which would delay Upper Deck's bid by several months.  This was likely the circumstances here.  Upper Deck is desperate to avoid a second request so as to make its $416 million bid more compelling than the current agreement Topps has to be acquired by a The Tornante Company LLC and Madison Dearborn Partners, LLC for $9.75 a share in cash, or about $385 million.  A refiling buys more time to convince the FTC that there is no antitrust problem with its transaction. And as I stated before in a prior post:

And the antitrust risk is clearly in both parties minds, as Topps 14D/9 filed today details that the substance of the parties' negotiations have concerned antitrust issues.  Topps is requesting that Upper Deck agree to a $56.5 million reverse termination fee and a modified hell or high water provision (a provision in which Upper Deck would agree to sell or hold separate assets to satisfy governmental antitrust concerns).  Upper Deck has resisted these provision, and the parties have agreed to suspend negotiations on the matter until the antitrust risk is clarified through the HSR process. 

Topps was scheduled to hold a shareholders meeting to vote on the Tornante acquisition on June 28.  But, the Delaware Court of Chancery enjoined the holding of the meeting to permit Upper Deck to commence its tender offer.  Topps has yet to announce the new date for the meeting but has set the record date for the close of business on July 3. 

For the time being, the deal is in the hands of the antitrust  authorities.  If and when they clear the transaction, expect the bidding for Topps to continue.  In the case of a second request, Topps may try and push forward with the Tornante bid, perhaps with a sweetener from that consortium to hasten the process.

With its HSR refiling Upper Deck is signalling that a second request is still a very real possibility.


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