RRD receives revised takeover proposal from largest investor

Richard Stuart-Turner
Wednesday, November 17, 2021

RR Donnelley & Sons (RRD) has received a revised proposal from its largest investor to acquire all of the outstanding shares of the business that it doesn’t already own.

Chatham Asset Management now offering $9.10 per share in cash
Chatham Asset Management now offering $9.10 per share in cash

The proposal from Chatham Asset Management for $9.10 (£6.76) per share in cash follows the US-headquartered marketing solutions and business services group entering into a definitive merger agreement earlier this month to be acquired by affiliates of Atlas Holdings.

This all-cash deal worth around $2.1bn that would see the business go private was unanimously approved by the group’s board of directors.

Under the terms of this deal Greenwich, Connecticut-headquartered Atlas Holdings, which operates a raft of manufacturing and distribution businesses globally, would acquire all of the outstanding shares of RRD common stock, and RRD stockholders would receive $8.52 per share in cash for each share of RRD common stock.

In a statement released late yesterday (16 November) about the proposal from Chatham Asset Management, RRD said: “The RRD board of directors, consistent with its fiduciary duties and in accordance with the terms of its merger agreement with Atlas, will carefully review and consider the revised proposal to determine the course of action that it believes is in the best interests of the company and RRD shareholders.

“RRD shareholders do not need to take any action at this time and the RRD board of directors has not yet made any determination with respect to the revised proposal.”

Just before RRD entered into the definitive merger agreement with Atlas Holdings, Chatham Asset Management had increased its offer to buy the remaining shares of the company for $9 to $9.50 per share in cash, up from its October offer of $7.50 per share in cash.

In Chatham’s letter to the board regarding its latest offer, the private investment firm added it would increase its offer to $9.34 per share if the termination fee and expense reimbursement payable under RRD’s agreement and plan of merger with affiliates of Atlas Holdings was eliminated.

Chatham also filed a lawsuit yesterday against RRD’s board and Atlas “to ensure a level playing field and reasonable and fair sale process aimed at maximising stockholder value”.

RRD was created by the three-way split of the 'old' RR Donnelley & Sons group in 2016 where the LSC Communications and Donnelley Financial Solutions operations were spun off into separate entities. LSC Communications was acquired by Atlas Holdings last year.

Prior to the pandemic, RRD had put in place a so-called 'poison pill' arrangement aimed at preventing anyone acquiring “undue influence or control” of the company without board approval.

Shares in the business were up 0.44% yesterday, closing at $9.22.

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