The trends in packaging printing are obvious: ever-declining run lengths, an increasing number of stock keeping units (SKUs) and more demanding embellishments to attract consumer attention – all of this against the backdrop of extremely short delivery times and sustainability. Special applications and the need for flawless production also add to the complexity. How can folding carton manufacturers manage this in a cost-effective way, even in Covid-19 pandemic times? Seeking an answer to this question, packaging printers in North America are increasingly investing in Heidelberg solutions for cost-effective production. “Since the onset of Covid-19 in March 2020, Packaging and Label Printers in North America have been very resilient against the downturn of the economy due to increased consumer demand for packaged goods in both grocery stores and pharmacies. Many of these printers have even grown during the crisis and are looking to invest or have recently invested in new machines and workflow from Heidelberg,” explains Felix Mueller, President of Heidelberg Americas.
R.R. Donnelley & Sons Company (NYSE: RRD) (“RRD” or the “Company”) announced today that its Board of Directors (the “Board”) unanimously determined that an unsolicited proposal from Chatham Asset Management, LLC (“Chatham”) to acquire all of the common stock of the Company not already owned by Chatham and its affiliates for $10.85 per share in cash (the “Revised Chatham Proposal”) constitutes a “Superior Proposal” as defined in the Company’s previously announced definitive merger agreement with affiliates of Atlas Holdings LLC (“Atlas”), dated as of November 3, 2021 (as amended on December 9, 2021, the “Amended Agreement”), subject to the condition that Chatham agree to extend the Revised Chatham Proposal until 9:05 a.m. CST on Friday, December 17, 2021 (the “Timing Condition”). If Chatham refuses to agree to the Timing Condition, the Board will deem the Revised Chatham Proposal as withdrawn and incapable of being accepted by the Company. Under the terms of the Amended Agreement, affiliates of Atlas have agreed to acquire the Company for $10.35 per share in cash.
“Today’s announcement is a testament to the robust process we have in place to maximize value for all stockholders,” said John C. Pope, Chairman of the Board. “Our Board and management team remain committed to acting in the best interests of RRD and all its stockholders, and will continue to take actions to achieve this objective.”
RRD has notified Atlas of the Board’s determination that the Revised Chatham Proposal constitutes a Superior Proposal and that RRD intends to terminate the Amended Agreement for the purpose of entering into a definitive merger agreement with affiliates of Chatham. Pursuant to the Amended Agreement, Atlas has the contractual opportunity through December 16, 2021 (the “Negotiation Period”) to negotiate an amendment of the Amended Agreement such that the Revised Chatham Proposal would no longer constitute a Superior Proposal. RRD intends, and is required by the terms of the Amended Agreement, to negotiate in good faith any adjustments or revisions to the terms and conditions of the Amended Agreement proposed by Atlas. RRD is contractually prohibited from terminating the Amended Agreement or entering into a definitive merger agreement with affiliates of Chatham during the Negotiation Period, which is the reason the Company has conditioned the Revised Chatham Proposal on the Timing Condition. Subject to the foregoing, RRD has informed Atlas that RRD intends to terminate the Amended Agreement at 9:00 a.m. CST on Friday, December 17, 2021 for purposes of entering into the Revised Chatham Proposal.
Under the Amended Agreement, the Company is required to pay a $20 million termination fee and $12 million expense reimbursement to Atlas if the Company terminates the Amended Agreement in order to enter into a definitive merger agreement with affiliates of Chatham as described herein. Chatham has agreed to pay the $20 million termination fee to Atlas on the Company’s behalf in such event; the Company has agreed to pay the expense reimbursement of $12 million. Under the terms of the Revised Chatham Proposal, the Company 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, the Company remains subject to the Amended Agreement and is complying with the terms and conditions of the Amended Agreement, which remains in effect unless and until the Amended Agreement is terminated. Accordingly, subject to and as required by the Amended Agreement, the Board has not made a “Change of Recommendation” (as defined in the Amended Agreement), reaffirms its recommendation of the Amended Agreement and rejects all “Alternative Acquisition Agreements” (as defined in the Amended Agreement). There can be no assurance that Atlas will seek to negotiate with RRD or will make a revised proposal.
The Company 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 the Amended Agreement.