Last week, Topps Co. (NASDAQ: TOPPS) agreed to be bought out by Torante, former Disney chief Michael Eisner's private equity firm. The company agreed to be acquired for $9.75 cents per share, but hit $10 in trading today, indicating that many believe that the company may eventually fetch a higher price.
Here's where it gets interesting: Topps directors, including Timothy Brog and Arnaud Ajdler, voted against the deal, and Topps management has responded in an unusual way. The deal included a "go-shop" provision, which means that the company can solicit offers from other companies for a period of time. Topps has taken the unusual step of banning those two directors, plus one other, from any involvement in the go-shop process. The Wall Street Journal's Deal Journal raised and an eyebrow, and I share their sentiments:
The WSJ writer comments, "Why did the board agree to the deal in the first place if 30% of its membership thought it undervalues the company (at $9.75 a share, the bid is below the stock's 52-week high of $10 reached last month)? Why are the three ill-suited to manage the "go-shop" process for a new suitor? Seems to us that people who don't like the deal on the table have the most incentive to ferret out a better one."
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