Topps Reaches An Agreement With Hedge Fund Investor

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Posted By: bruce Dorskind

By MICHAEL J. de la MERCED
Published: July 29, 2006
A bitter proxy contest between the Topps Company, the maker of baseball cards, and two activist hedge funds neared a peaceful resolution yesterday as both sides agreed to a last-minute compromise on candidates for the board.

The agreement came after two hours of negotiations that had delayed the company’s annual shareholder meeting and a vote on two rival slates for three seats on the board.

Under the settlement between Topps and the two hedge funds, Pembridge Capital Management and Crescendo Partners, the company’s board will grow to 10 from 9. Topps’s longtime chairman and chief executive, Arthur T. Shorin, will remain a director candidate. But two other management candidates will drop out, clearing the way for the dissidents’ three nominees. A vote on the board candidates will be held Aug. 25.

The settlement means the end of a yearlong battle waged by Timothy E. Brog, the manager of the $25 million Pembridge fund, to force change at the 86-year-old company, which also makes Bazooka chewing gum. Mr. Brog and Crescendo Partners, calling themselves the Topps Full Value Committee, had accused management of not doing enough to turn the company around.

Topps’s slate of directors had included two incumbents, Mr. Shorin and Edward D. Miller, the former president and chief executive of AXA Financial, and a new candidate, Leonard Stern. Mr. Brog’s slate consists of Arnaud Ajdler of Crescendo; John J. Jones, a consultant for Trump Entertainment Resorts; and himself.

During the yearlong fight, Mr. Brog criticized Mr. Shorin’s management in often harsh terms. Topps fought back by calling into question Mr. Brog’s credentials and experience.

But after yesterday’s settlement, Mr. Brog struck a different tone.

“The Topps Full Value Committee is excited to reach settlement with the Topps Company, and we look forward to working with Topps to make it a much stronger company,” Mr. Brog said.

A Topps spokesman declined to comment.

Shares of Topps rose 13 cents, or 1.6 percent, yesterday, to $8.15.

Only a handful of shareholders attended yesterday’s shareholder meeting, and several left as the negotiations dragged on.

“It’s probably excellent that they have new voices on the board,” said Richard Dolce, a shareholder who once did business with Topps. “Hopefully they’ll get the company back on track. Some new blood might give it some new direction.”