RR Donnelley (RRD) has accepted a revised proposal from affiliates of Atlas Holdings to increase the price per share of its pending acquisition of the business but has already received an increased offer in response from Chatham Asset Management, its largest investor.

The bidding war over the future ownership of the US-headquartered multichannel marketing and business services group intensified last week when it received an unsolicited revised proposal from Chatham to acquire all of the RRD shares that it does not already own for $10.25 (£7.77) per share in cash.

RRD’s board unanimously determined that this constituted a ‘Superior Proposal’ and notified Atlas that it intended to terminate the original Atlas Merger Agreement for the purpose of entering into a definitive merger agreement with affiliates of Chatham.

However, a revised proposal (the ‘Amendment’) from affiliates of Atlas Holdings for $10.35 per share in cash – up from its previous offer of $8.52 per share that had already been agreed in early November, was announced yesterday (9 December).

RRD said it has now entered into an amendment to its original definitive merger agreement with affiliates of Atlas and that the revised all-cash transaction is valued at a total enterprise value of approximately $2.2bn and total equity value of around $856m.

During the ‘Negotiation Period’, Atlas had the opportunity until Tuesday (7 December) to negotiate an amendment of its original agreement such that Chatham’s revised proposal would no longer constitute a ‘Superior Proposal’.

RRD was not permitted to terminate the original agreement with Atlas or enter into a definitive merger agreement with affiliates of Chatham during this period.

Having consulted with its financial advisors and outside legal counsel, and taking into account the revisions proposed in the Amendment, RRD said that Chatham’s revised proposal no longer constituted a ‘Superior Proposal’ and that entry into the amended Atlas proposal “was in the best interests of RRD and its stockholders”.

The board has unanimously approved the Amendment and recommends that RRD’s stockholders vote in favour of adopting the amended agreement.

Shortly after yesterday’s announcement by RRD, however, Chatham increased its own offer once again to acquire RRD for $10.85 per share in cash. It called on the board to declare this offer superior and proceed to signing it by the end of the day on Monday (13 December).

Chatham’s increased offer will expire at 11.59pm ET on Monday unless it receives a countersigned merger agreement from RRD.

In a letter sent to RRD’s board Chatham said: “RRD’s board has once again shirked its fiduciary duties and deprived stockholders of receiving a higher price for their shares by refusing to meaningfully engage with Chatham and agreeing to an inferior transaction with a higher, entirely avoidable termination fee and expense reimbursement.

“We urge the board to act in the best interest of its stakeholders, declare our increased offer superior and proceed quickly to finalising our proposed transaction.”

RRD had yet to respond to Chatham at the time of writing. 

Atlas Holdings also owns LSC Communications, one of three companies formed when the old RR Donnelley & Sons group was split up.

Shares in RRD were up by 2.87% yesterday, closing at $10.75, and its after hours share price was up by another 3.26% at $11.10.


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