RRD receives unsolicited non-binding cash proposal for $11.00 per share

Just when it looked like the bidding war for R.R. Donnelley & Sons Co. (RRD) was won by Chatham Asset Management, the company announced the receipt of an unsolicited non-binding “Alternative Acquisition Proposal” to acquire all of the outstanding shares of RRD’s common stock for $11.00 per share in cash, from an unnamed “Strategic Party”. Under the terms of the Chatham Merger Agreement,the deal was to acquire RRD for $10.85 per share in cash. Previously, on November 27, 2021, RRD had received a non-binding proposal from the Strategic Party to acquire all of the outstanding shares of RRD’s common stock for $10.00 per share in cash, subject to other terms and conditions.

On Dec. 29, 2021, the RRD board determined the “Strategic Party Proposal would reasonably be expected to lead to a ‘Superior Proposal.'” Chatham Asset Management is not taking the upstart offer lying down. In announcing the new bidder, RRD also confirmed the receipt of a letter from Chatham regarding the strategic party proposal. In the letter, Chatham stated the Strategic Party offer “does not constitute, and would not reasonably be expected to lead to, a Superior Proposal,” and would be a breach of its current obligations under the Chatham acquisition agreement.

Next step

A shareholder proxy vote will be forthcoming should the existing $10.85 per share Chatham deal proceeds as announced. But if the RRD board breaks the Chatham agreement and reaches an agreement with the mysterious “Strategic Party”, the shareholder vote would be put on hold.” RRD will have to pay Chatham $12 million in expense reimbursement, as well as $20 million in other termination fees if the deal is quashed. Strategic Party has pledged to pay those fees, according to RRD. That doesn’t mean Chatham is done, however, as it could turn in another bid to surpass the offer from Strategic Party.