sec document
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /_/
Filed by a Party other than the Registrant /X/
Check the appropriate box:
/_/ Preliminary Proxy Statement
/_/ Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/_/ Definitive Proxy Statement
/X/ Definitive Additional Materials
/_/ Soliciting Material Under Rule 14a-12
THE TOPPS COMPANY, INC.
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(Name of Registrant as Specified in Its Charter)
CRESCENDO ADVISORS LLC
CRESCENDO PARTNERS II L.P., SERIES Y
CRESCENDO PARTNERS III, L.P.
CRESCENDO INVESTMENTS III, LLC
CRESCENDO INVESTMENTS II, LLC
ERIC S. ROSENFELD
ARNAUD AJDLER
THE COMMITTEE TO ENHANCE TOPPS
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(Name of Persons(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/_/ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/_/ Fee paid previously with preliminary materials:
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/_/ Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed
Crescendo Partners II, L.P., Series Y has filed a definitive proxy
statement with the SEC in connection with the solicitation of proxies against a
proposed merger between The Topps Company, Inc. ("Topps") and a buyout group
that includes Madison Dearborn Partners, LLC and an investment firm controlled
by Michael Eisner, which will be voted on at a special meeting of the Company's
stockholders.
Item 1: On September 11, 2007, Arnaud Ajdler delivered the following
letter to Institutional Shareholder Services Inc.:
September 11, 2007
BY EMAIL AND FACSIMILE
Mr. Christopher Young
Institutional Shareholder Services
2099 Gaither Road
Rockville, MD 20850-4045
Dear Mr. Young:
Yesterday, Topps filed a presentation to investors to attempt to get their
support for the $9.75 Eisner deal. Crescendo wants to highlight two points that
are relevant to Topps' valuation and clearly demonstrate that the $9.75 offer is
inadequate:
1. On page 12, Topps discloses its latest financial projections for 2008 (Q2
2008 just ended so we are half-way through the year). Topps latest 2008 EBITDA
projection is $29.5 million, which is ABOVE the management case projections of
$29.4 million and WELL ABOVE the adjusted case projections of $25.7 million. As
a reminder, according to Lehman's January presentation to the Topps' Board of
Directors, its DCF value of Topps under the management case scenario is between
$10.64 and $12.99 per share, well above the $9.75 Eisner deal. The 2008 actual
financial results and Topps' latest financial projection highlights (a) that the
$9.75 price is grossly inadequate and (b) that the relevant projections are the
management projections. As Crescendo has publicly stated since Topps filed its
initial misleading proxy statement, the adjusted case scenario was artificially
created by Lehman with the help of management to show a lower valuation for
Topps and thereby justify its fairness opinion.
2. On page 13, Topps values the entertainment division based on the EBITDA
multiples of RC2, Jakks Pacific, Hasbro, and Mattel. This valuation is flawed
for the following two reasons:
a. These four comps are facing significant specific issues that have
materially depressed their valuations. Jakks Pacific's value is
impacted negatively by a lawsuit from WWE and the likely loss of the
WWE licenses in 2009, rendering meaningless current multiples. RC2's
value has been negatively impacted by the recall of some of their
products, the prospects of lawsuits related to this recall, and the
increasing cost of zinc (used in the manufacture of die-cast
products). Hasbro has had a spectacular 2007 fiscal year with
multiple home runs (Spiderman 3 and Transformers). The multiple
based on 2007 EBITDA is therefore meaningless and artificially low
since the market doesn't expect this performance to continue.
Analysts expect 2009 EBITDA to be 13% below 2007 EBITDA. Finally,
Mattel has been plagued with a number of product recalls due to lead
paint content and design problems as well as increased cost of raw
materials, depressing its current valuation. ToppS' entertainment
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division does not face any of these material issues, is performing
well as evidenced by EBITDA growth from $23.7 to $32.8 million from
fiscal year 2007 to 2008 and is well positioned for future growth.
b. Even if the multiples of these reported comps were normalized, we do
not believe they can be applied blindly to Topps because of Topps'
depressed margins. As the management projection indicates, the
entertainment division has significant opportunities to grow top-line
revenue and profitability.
Therefore, Topps is trying to value the entertainment division by applying a
depressed multiple to a depressed earnings number. Nowhere does management take
into account that Topps operates in a less competitive environment than these
four reported comps in light of having only one major competitor. We believe
that the entertainment division is Topps' jewel and we are delighted to see that
the division continues to perform extremely well.
I think that these two points are further evidence that the $9.75 deal is
inappropriate and should be rejected by stockholders.
Very truly yours,
/s/ Arnaud Ajdler
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Arnaud Ajdler
CERTAIN INFORMATION CONCERNING THE PARTICIPANTS
The Committee to Enhance Topps (the "Committee"), together with the other
participants named below, has made a definitive filing with the Securities and
Exchange Commission ("SEC") of a proxy statement, a proxy supplement and an
accompanying proxy card to be used to solicit votes in connection with the
solicitation of proxies against a proposed merger between The Topps Company,
Inc. (the "Company") and a buyout group that includes Madison Dearborn Partners,
LLC, and an investment firm controlled by Michael Eisner, which will be voted on
at a meeting of the Company's stockholders (the "Merger Proxy Solicitation").
Crescendo Advisors ("Crescendo Advisors"), together with the other participants
named below, intends to make a preliminary filing with the Securities and
Exchange Commission ("SEC") of a proxy statement and an accompanying proxy card
to be used to solicit votes for the election of its nominees at the 2007 annual
meeting of stockholders of Topps (the "Annual Meeting Proxy Solicitation").
THE COMMITTEE AND CRESCENDO ADVISORS ADVISE ALL STOCKHOLDERS OF THE COMPANY TO
READ THE PROXY STATEMENT, AND OTHER PROXY MATERIALS, INCLUDING PROXY
SUPPLEMENTS, IN CONNECTION WITH EACH OF THE MERGER PROXY SOLICITATION AND THE
ANNUAL MEETING PROXY SOLICITATION AS THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION. SUCH PROXY MATERIALS WILL BE AVAILABLE AT NO
CHARGE ON THE SEC'S WEB SITE AT HTTP://WWW.SEC.GOV. IN ADDITION, THE
PARTICIPANTS IN THE PROXY SOLICITATIONS WILL PROVIDE COPIES OF THE PROXY
STATEMENT WITHOUT CHARGE UPON REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO
THE PARTICIPANTS' PROXY SOLICITOR, D.F. KING & CO., INC. AT ITS TOLL-FREE
NUMBER: (800) 628-8532.
The participants in the Merger Proxy Solicitation are Crescendo Advisors LLC, a
Delaware limited liability company ("Crescendo Advisors"), Crescendo Partners
II, L.P., Series Y, a Delaware limited partnership ("Crescendo Partners II"),
Crescendo Investments II, LLC, a Delaware limited liability company ("Crescendo
Investments II"), Crescendo Partners III, L.P., a Delaware limited partnership
("Crescendo Partners III"), Crescendo Investments III, LLC, a Delaware limited
liability company ("Crescendo Investments III"), Eric Rosenfeld, Arnaud Ajdler
and The Committee to Enhance Topps (the "Merger Proxy Solicitation
Participants").
The participants in the Annual Meeting Proxy Solicitation include the Merger
Proxy Solicitation Participants, together with Timothy E. Brog, John J. Jones,
Michael Appel, Jeffrey D. Dunn, Charles C. Huggins, Thomas E. Hyland, Thomas B.
McGrath and Michael R. Rowe (the "Annual Meeting Proxy Solicitation
Participants"). Together, the Merger Proxy Solicitation Participants and the
Annual Meeting Proxy Solicitation Participants are referred to herein as the
"Participants."
Crescendo Advisors beneficially owns 100 shares of common stock of the Company.
Crescendo Partners II beneficially owns 2,568,200 shares of common stock of the
Company. As the general partner of Crescendo Partners II, Crescendo Investments
II may be deemed to beneficially own the 2,568,200 shares of the Company
beneficially owned by Crescendo Partners II. Crescendo Partners III beneficially
owns 126,500 shares of common stock of the Company. As the general partner of
Crescendo Partners III, Crescendo Investments III may be deemed to beneficially
own the 126,500 shares of the Company beneficially owned by Crescendo Partners
III. Eric Rosenfeld may be deemed to beneficially own 2,694,900 shares of the
Company, consisting of 100 shares held by Eric Rosenfeld and Lisa Rosenfeld
JTWROS, 2,547,700 shares Mr. Rosenfeld may be deemed to beneficially own by
virtue of his position as managing member of Crescendo Investments II, 126,500
shares Mr. Rosenfeld may be deemed to beneficially own by virtue of his position
as managing member of Crescendo Investments III and 100 shares Mr. Rosenfeld may
be deemed to beneficially own by virtue of his position as managing member of
Crescendo Advisors. Mr. Ajdler beneficially owns 2,301 shares of the Company.
Timothy E. Brog beneficially owns 133,425 shares of common stock of the Company,
John J. Jones beneficially owns 2,301 shares of common stock of the Company, and
none of Michael Appel, Jeffrey D. Dunn, Charles C. Huggins, Thomas E. Hyland,
Thomas B. McGrath and Michael R. Rowe beneficially own any shares of common
stock of the Company.
FOR ADDITIONAL INFORMATION PLEASE CONTACT:
D.F. King & Co., Inc.
(800) 628-8532
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