RR Donnelley agrees to $2.1 billion acquisition from from Atlas Holdings

GaryPageau , ,

North America’s largest commercial printing conglomerate (and owner of the Motif Photos app) RR Donnelley & Sons (RRD) announced it  entered into a definitive merger agreement to be acquired by affiliates of Atlas Holdings in an all-cash transaction with a value of approximately $2.1 billion ($8.52 per share).

The transaction, unanimously approved by the RRD board, is expected to close in the first half of 2022, subject to customary closing conditions, including approval by RRD stockholders and receipt of regulatory approvals. Under the agreement, Atlas will acquire all of the outstanding shares of RRD common stock, and RRD stockholders will receive $8.52 per share in cash for each share of RRD common stock; RRD would no longer be a publicly-traded company. The purchase price is a nearly 30% premium over RRD’s closing price Nov. 2.

Atlas, headquartered in Connecticut, already owns book and publication printing concern LSC Communications, Finch Paper, Twin Rivers Paper, and Millar Western. Atlas is also negotiating to acquire coated paper manufacturer Verso Corp.

The acquisition agreement with Atlas Holdings was unanimously approved by RRD’s board of directors, according to a press release. Under the agreement, Atlas will acquire all of the outstanding shares of RRD common stock, and RRD stockholders will receive $8.52 per share in cash for each share of RRD common stock; RRD would no longer be a publicly-traded company. The purchase price represents a premium of approximately 29.1% over RRD’s closing price on Nov.2, 2021, approximately 72.8% over RRD’s closing share price on Oct.11, 2021, the last trading day prior to the announcement of a non-binding offer by Chatham Asset Management, LLC, and a premium of approximately 64.1 percent over RRD’s 60-day volume weighted average price for the period ended October 11, 2021.

“The RRD board regularly reviews the company’s strategic priorities, and today’s announcement is a culmination of a thorough, multi-year process to maximize value for RRD stockholders,” said John Pope, RRD chairman of the board of directors, said in a press release. “After a careful and thorough analysis, the RRD board believes that this transaction, which delivers an immediate premium and certain cash value, is in the best interest of RRD and our stockholders. We look forward to working with Atlas to complete this value enhancing transaction.”

Atlas intends to finance the transaction through a combination of committed equity financing provided by affiliates of Atlas, as well as debt financing commitments from JPMorgan Chase Bank, N.A. and Macquarie Capital.

The press release stated, under the terms of the merger agreement, RRD may solicit additional acquisition proposals from third parties for a period of 25 calendar days from the signing of the merger agreement. In accordance with the merger agreement, RRD’s board of directors, with the assistance of its advisors, intends to solicit acquisition proposals during this period.

RRD’s largest bondholder and a major shareholder, Chatham Asset Management, has already expressed interest. In mid-October, Chatham submitted a proposal to acquire RRD for $7.50 per share but has since upped the price to over $9 a share. RRD responded with a letter saying it would consider Chatham’s offer but more details are needed regarding the transaction structure, equity, and debt financing sources, according to the published reports.