R.R. Donnelley Investor Chatham Raises Bid, Sues to Block Atlas

(Bloomberg) -- R.R. Donnelley & Sons Co.’s biggest shareholder has increased its bid to buy the printing and marketing company, and is suing its board to try to foil a competing bid.

Chatham Asset Management, which already owns 14.9% of R.R. Donnelley, said Tuesday it’s submitted a cash offer to buy the rest of the company in a deal that would value it at about $663 million. The $9.10-a-share bid bests an offer from Atlas Holdings for $8.52 a share that was made on Nov. 3. If a termination fee with Atlas is eliminated, Chatham said it will boost its offer to $9.34 a share.

R.R. Donnelley shares rose less than 1% to $9.22 at 10:22 a.m. in New York.

R.R. Donnelley’s board didn’t conduct a reasonable sale process before agreeing to a deal with Atlas and a $28 million termination fee, Chatham said, adding that it sued the directors in the Delaware Court of Chancery. The board failed to engage with Chatham, which is also its biggest bondholder, as the share price fell in recent years, the investor said in a statement.

Chatham previously has pushed for several changes at the company, including for it to buy back shares and not implement or renew a so-called poison pill provision to discourage a takeover. In September, it said in another letter that it had proposed two new directors to the company’s board, and called for a new chairman to be appointed. 

Chatham initially made an unsolicited $7.50-a-share offer to acquire R.R. Donnelley’s outstanding stock in October.

Chicago-based R.R. Donnelley, which was founded in 1864, provides business communications services and marketing solutions, according to its website. It has roughly 30,000 clients and 33,000 employees across 28 countries. 

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