On 14 December, following a bidding war, the US-headquartered multichannel marketing and business services group said it was set to be acquired by its largest investor, Chatham Asset Management, for $10.85 per share in cash
The situation took a fresh turn on 27 December when the company said it had received an unsolicited non-binding ‘Alternative Acquisition Proposal’, as defined in its definitive merger agreement with affiliates of Chatham, from a strategic party, that was unnamed but referred to as the ‘Strategic Party’, to acquire all of the outstanding shares of RRD’s common stock for $11.00 per share in cash, subject to other terms and conditions.
In a statement released yesterday (20 January), RRD said that on 3 January the strategic party had indicated to RRD that it was targeting today (21 January) for a submission of a binding proposal.
In lieu of submitting a binding proposal, the strategic party delivered the non-binding ‘Updated Strategic Party Proposal’ which included the increased offer price of $11.50 per share in cash.
The updated proposal also outlined various other terms and conditions, including the strategic party stating that it has “substantially completed” its financial, legal, tax, and other due diligence on RRD and its business.
RRD’s board said that, at this time, it has not determined that the updated proposal from the strategic party constitutes a ‘Superior Proposal’ as defined in the merger agreement with Chatham and there can be no assurances that a transaction will result from the updated strategic party proposal or that any alternative transaction will be entered into or consummated.
The board also reaffirmed its recommendation of the Chatham deal.
Under the merger agreement with Chatham, RRD is required to pay a $12m expense reimbursement to Chatham if it terminates the Chatham agreement in order to enter into a definitive merger agreement with respect to the updated proposal from the strategic party.
The company would also be required to reimburse Chatham for the $20m payment previously made by Chatham to cover the termination fee due under its now-terminated definitive merger agreement with affiliates of Atlas Holdings.
In its updated proposal, the strategic party has stated it would agree to pay both the expense reimbursement and the Atlas termination fee refund to Chatham on RRD’s behalf in such event.
RRD said it expects to schedule the special meeting of stockholders for purposes of voting on the Chatham merger agreement “and the transactions contemplated thereby” on 23 February 2022.
The company said it does not intend to disclose developments with respect to this process unless and until it determines it is appropriate to do so, subject to the terms of its merger agreement with Chatham.
Shares in RRD had jumped by 4.62% to $11.10 at close yesterday and had a pre-market price today of $11.41.
