(Adds analyst's comments, closing stock price)
PHILADELPHIA May 24 Baseball-trading cards company Topps Co., Inc. TOPP.O said on Thursday it received a $424 million takeover offer from Upper Deck Co. that exceeds its $385 million agreement to be bought by a private equity firm and an investment group led by former Walt Disney Co. (DIS.N) chief Michael Eisner.
In March, Topps agreed to be acquired by Madison Dearborn Partners and Tornante Co., an investment firm run by Eisner, for $9.75 per share. Upper Deck, which publishes sports trading cards and other memorabilia, offered $10.75 per share.
Topps said Tornante and Madison Dearborn have granted it permission to negotiate with Upper Deck. The Topps board has not made any determination whether Upper Deck's new overture would lead to a superior offer.
Upper Deck could not be immediately reached for comment.
Topps' deal to be taken private by Madison Dearborn and Tornante, drew criticism from a member of Topps board of directors and activist hedge fund Crescendo Partners II LP, which said the price was too low and the auction process flawed.
Topps then solicited other offers during the subsequent 40 days, which expired April 14. Upper Deck had indicated its interest in acquiring Topps, but Topps said it had concerns about the suitor's ability to finance the deal, regulatory risks and other issues.
Upper Deck's new offer of $10.75 per share contained no financing commitments, but included a "highly confident" letter from a commercial bank that put many conditions on any potential funding, Topps said.
"If the Upper Deck offer firms up, we believe there is a good chance that (Tornante and Madison Dearborn) will raise its bid to meet or exceed the $10.75 (per share) offer," said Wedbush Morgan Securities analyst Seas McGowan.
A deal with Upper Deck would be depend on approval from anti-trust regulators and Major League Baseball, which has the right to designate a new licensee to make baseball cards at any time, McGowan said.
Major League Baseball was not immediately available to comment.
Topps shares added 48 cents, or 4.9 percent, to close at $10.26 on Nasdaq.