China Toy Fair


Tomy to Acquire RC2 Corporation

Tomy Company, Ltd. and RC2 Corporation have entered into a definitive agreement pursuant to which Tomy will acquire RC2 through an all-cash tender offer and second-step merger valued at approximately $640 million. The transaction was approved by Tomy’s board of directors. RC2’s board of directors has also approved the agreement and recommended that RC2’s stockholders tender their shares to Tomy pursuant to the offer. Tomy, through a U.S. subsidiary, will make an offer to purchase all outstanding shares of RC2 common stock for $27.90 per share. The tender offer price represents a 30.9 percent premium to RC2’s average closing stock price over the three-month period ended March 9, 2011, and a 27.2 percent premium over the closing price of RC2’s common stock on March 9, 2011. The tender offer is scheduled to commence in 10 business days and is expected to close during the second quarter of this year. The tender offer is subject to certain customary conditions, including the tender of a majority of the outstanding shares of RC2’s common stock on a fully diluted basis. The transaction is not conditioned on financing. Following completion of the tender offer, Tomy will acquire the remaining outstanding shares of RC2’s common stock for $27.90 per share through a second-step merger.

The intent of the transaction is to strengthen both companies and create a global platform to drive further growth from existing owned and licensed brands, as well as launch new global brands and product lines, ultimately delivering significant benefits to consumers, customers, and employees. The combined companies will benefit from a more diversified product portfolio, greater leverage of Tomy’s extensive R&D, sourcing, and manufacturing network and greater access to the U.S. and Japan, two of the world’s largest toy and juvenile product markets. RC2’s brands will continue to be managed by the current leadership team who are expected to drive future development of the business.

Under the terms of the merger agreement, RC2 may solicit acquisition proposals from third parties for a period of 30 calendar days continuing through April 9, 2011, subject to extension for an additional 15 calendar days in limited circumstances. It is not anticipated that any developments will be disclosed with regard to this process unless RC2’s board of directors decides to accept a superior proposal or to require Tomy to extend the offer in connection with a potential superior proposal in the limited circumstances provided in the merger agreement. The merger agreement provides Tomy with a customary right to match a superior proposal. There are no guarantees that this process will result in an alternative transaction.

BofA Merrill Lynch is acting as exclusive financial adviser to Tomy, while Skadden, Arps, Slate, Meagher & Flom LLP, and Nishimura & Asahi are acting as legal advisers for Tomy with regard to the transaction. Robert W. Baird & Co. is acting as exclusive financial adviser to RC2 and Reinhart Boerner Van Deuren s.c. is acting as its legal adviser.