Last Thursday (9 December), shortly after the US-headquartered multichannel marketing and business services group said it had entered into an amendment to its original definitive merger agreement with affiliates of Atlas Holdings for $10.35 (£7.81) per share in cash, RRD’s largest investor Chatham increased its own offer once again to acquire RRD for $10.85 per share in cash.

RRD’s board subsequently determined that Chatham’s latest unsolicited proposal to acquire all of the RRD shares that it does not already own constitutes a ‘Superior Proposal’ as defined in the company’s original definitive merger agreement with Atlas from early November, which was then amended last Thursday.

This is subject to the condition, however, that Chatham agrees to extend its revised proposal until 9.05am (3.05pm GMT) on Friday (17 December) (the Timing Condition). If Chatham refuses to agree to this, RRD’s board said it will deem Chatham’s revised proposal “as withdrawn and incapable of being accepted by the company”.

RRD has notified Atlas of the board’s determination that Chatham’s revised proposal constitutes a ‘Superior Proposal’ and that RRD intends to terminate the amended agreement with Atlas for the purpose of entering into a definitive merger agreement with affiliates of Chatham.

RRD said that pursuant to the amended agreement, Atlas now has the contractual opportunity until Thursday (16 December) to negotiate another amendment such that Chatham’s revised proposal would no longer constitute a ‘Superior Proposal’.

RRD is contractually prohibited from terminating the amended agreement with Atlas or entering into a definitive merger agreement with affiliates of Chatham during the negotiation period, which is why the company has conditioned Chatham’s revised proposal with the Timing Condition.

The company said that, subject to the above, RRD has informed Atlas that it intends to terminate the amended agreement at 9am CST on Friday (17 December), for purposes of entering into the revised Chatham proposal.

Under the terms of the amended agreement with Atlas, RRD would be required to pay a $20m termination fee and $12m expense reimbursement to Atlas if RRD terminates the amended agreement to enter into a definitive merger agreement with affiliates of Chatham.

Chatham has agreed to pay the termination fee to Atlas on RRD’s behalf in such event, while RRD has agreed to pay the expense reimbursement of $12m.

Under the terms of the revised Chatham proposal, RRD would be required to repay Chatham for such termination fee paid by Chatham under certain circumstances in connection with a termination of the proposed definitive merger agreement with affiliates of Chatham.

At this time, RRD said it remains subject to the amended agreement with Atlas and is complying with the terms and conditions of this, which remains in effect unless and until this agreement is terminated.

Accordingly, subject to and as required by the amended agreement, the board said it has not made a ‘change of recommendation’, reaffirms its recommendation of the amended agreement with Atlas, and rejects all ‘alternative acquisition agreements’. It said there can be no assurance that Atlas will seek to negotiate with RRD or will make a revised proposal.

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 3.44% on Friday (10 December), closing at $11.12, although dropped slightly to $11.05 after hours.