The US-headquartered multichannel marketing and business services group announced last night (14 December) that it has entered into a definitive merger agreement to be acquired by affiliates of Chatham Asset Management, a private investment firm, in an all-cash transaction with a total enterprise value of approximately $2.3bn and total equity value of approximately $897m.

RRD’s previously announced merger agreement with affiliates of Atlas Holdings, dated 3 November 2021 and amended on 9 December – at which point affiliates of Atlas had agreed to acquire RRD for $10.35 per share in cash – has now been terminated.

This termination follows the decision by Atlas to waive its contractual opportunity through to tomorrow (16 December) to negotiate a further amendment so that the transaction contemplated by Chatham’s merger agreement would have no longer constituted a ‘Superior Proposal’, as defined in the amended Atlas merger agreement.

The Chatham merger agreement has been unanimously approved by the RRD board of directors and, under the terms of this, an affiliate of Chatham will acquire all of the RRD common stock that it does not already own.

RRD president and CEO Dan Knotts said: “This transaction, which follows a robust and thorough process, is a recognition of the enormous value created by our talented employees, whose passion and dedication to the success of RRD and our clients has enabled us to achieve this important milestone.

“Under Chatham’s ownership, I expect that RRD will remain an industry-leading marketing and business communications company, with enhanced resources and flexibility, to effectively meet the evolving needs of our clients.”

Chatham added: “As a longstanding, supportive investor in RRD, we are pleased to have reached this agreement with the company. RRD possesses a strong portfolio of assets and capabilities, and we look forward to leveraging our deep understanding of its business, as well as our extensive experience in the print media and related industries, to drive long-term value for all stakeholders.”

The Chatham transaction is expected to close in the first half of 2022, subject to customary closing conditions, including the approval of RRD stockholders and receipt of regulatory approvals.

The statement said the merger agreement with Chatham “contemplates that affiliates of Chatham will finance the transaction through a combination of committed equity financing provided by Chatham and certain of its affiliates” and debt financing for which Jefferies Finance and Wells Fargo Capital Finance have provided commitments. The transaction is not subject to a financing condition.

RRD said it is expecting to announce a special meeting of stockholders to approve the Chatham transaction “at a later date”.

Chatham and certain of its affiliates, which hold approximately 14.99% of the outstanding shares of RRD common stock, have entered into a voting agreement with RRD, pursuant to which they have agreed, among other things, to vote their shares of RRD common stock in favour of the transaction.

Shares in RRD were down by 0.54% yesterday, closing at $11.01, and dropped further after hours to $10.70.

Upon completion of the Chatham transaction, RRD’s shares will no longer trade on the New York Stock Exchange and RRD will become a private company.