Monday, May 21, 2012 3:17 PM PT
Dreams Inc. Shareholders Seek To Halt
$183 Million Acquisition by Fanatics Inc.

     (CN) - Shareholders of Dreams Inc. want to block a proposed $183 million merger with Fanatics Inc. and its subsidiary Sweet Tooth Acquisition Corp.
     Lead plaintiff Scott Kaplan filed a class action challenging the acquisition of the sports memorabilia firm, claming the deal is unfair to shareholders given the company's growth potential.
     Named defendants include Dreams chairman Sam Battistone and directors Dale Larsson, David Malina, Steven Rubin, and CEO Ross Tannenbaum.
     Dreams, headquartered in Plantation, Fla., sells licensed sports products and autographed memorabilia. It markets those products at the website FansEdge.com, and operates ten FansEdge stores in Chicago, Ill.
     According to the lawsuit, the Dreams board breached its fiduciary duties to shareholders by accepting Fanatics lowball offer of $3.45 per share.
     Dreams is an ever growing company "by any measure," with yearly revenue increases of 27 percent, according to the lawsuit.
     "Notwithstanding its terrific financial results, the individual defendants agreed to sell the company for a mere 15 percent premium to the company's recent high of $3 per share," the lawsuit says.
     The deal also includes several deal protections including a $5.5 million termination fee, a no-solicitation provision and last-look provision which gives Fanatics five business days to renegotiate in the event of an unsolicited offer.
     "The lockup provisions unduly bind the board to the proposed merger and make it entirely unlikely that the board members will fulfill their fiduciary duties to shareholders in the future," the complaint states. "As such, the lockup provisions, which were approved by the Dreams board as part of the merger agreement, represent an ongoing breach of fiduciary duty."
     Fanatics also tipped the scales in its favor by negotiating voting agreements with Tannenbaum and Battistone, who own 35 percent of Dreams' outstanding shares, according to the complaint.
     The class is represented by Jayne Goldstin of Shepherd Finkelman Miller & Shah in Weston, Fla.