The chess game to acquire RRD continues, but this time in a competitive bid between Chatham Asset Management and an unnamed strategic party.
Private equity firm Chatham Asset Management finally succeeded in acquiring North America’s largest commercial printing group, RR Donnelley & Sons (RRD), which had sales of $4.8 billion.Chatham – RRD’s largest bondholder and 14.99% of common stockholders thought it Finally won the battle.Valued at approximately $2.3 billion.
But not so fast.Another bidder rejoined the fray.On December 29, 2021, RRD announced that it has received an unsolicited, non-binding alternative proposal from an undisclosed strategic party to acquire all outstanding shares of RRD’s common stock for $11 per share in cash, subject to certain terms and conditions. As part of its proposal, the strategic buyer also said it would pay RRD’s $12 million in expense reimbursement fees owed to Chatham for terminating the pending acquisition agreement and reimburse Chatham’s $20 million termination fee paid to Atlas Holdings on behalf of RRD.their original agreement.
This is not the first time the unnamed entity has made an offer to RRD.On November 27, 2021, it submitted a non-binding proposal to purchase RRD’s common stock for $10 in cash, subject to additional terms and conditions.But that was the last time a strategic buyer was publicly mentioned…until now.
With this new offer, RRD’s Board of Directors, in consultation with its outside financial advisors and legal advisors, determined that it is reasonable to expect that the Strategic Party Proposal will result in a “Priority Proposal.”Having said that, the board does confirm that there can be no assurance that the transaction will result from the strategic proposal, or that any alternative transaction will be concluded or consummated.
Either way, Chatham Asset Management isn’t standing still.In announcing the new bidder, RRD also confirmed receipt of Chatham’s letter regarding the strategic party proposal.In the letter, Chatham indicated to the RRD board that it believed this latest offer did not constitute, and would not reasonably be expected to result in, a priority proposal and that the board’s conclusion would be in breach of the company’s acquisition agreement with Chatham.
Chatham further stated that it believes that the RRD’s board of directors must not negotiate or discuss with strategic parties, or provide them with non-public information or data.
This latest development could rekindle Chatham’s earlier pending lawsuit (or lead to new lawsuits) against RRD’s board of directors in Delaware Chancery Court to meet its fiduciary duty to broker the best deal for shareholders.At the time, Chatham asked the court to declare the Atlas termination fee and certain other terms of the Atlas merger agreement unenforceable, causing RRD to redeem its poison pill program and waive Delaware law that could have blocked Chatham. Tom directly accepts certain terms of his offer.Shareholders through third-party tender offer.
If the deal with Chatham’s existing $10.85 per share cash merger goes through as agreed, a proxy vote for shareholders is imminent.However, this special virtual shareholder meeting will be put on hold if RRD terminates the agreement and strikes a buyout agreement with a mysterious strategic buyer (referred to as “Party C”).This, in turn, could lead Chatham to raise its takeover bid again, exceeding Party C’s $11 per share cash offer.
Mark Michelson is the Editor-in-Chief of Printing Impressions.Michelson, who has held this position since 1985, is an award-winning journalist and a member of several industry honor societies.Reader feedback is always encouraged.Email mmichelson@napco.com
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Post time: Jan-18-2022
