R.R. Donnelley & Sons Company (NYSE: RRD) is engaged as an integrated communications company, which offers solutions to help companies optimize their multichannel marketing and business communications. Shares of the communications company are surging 38% through early trading on Tuesday, October 12, 2021. Over the past three months, R.R. Donnelley has seen average daily volume of 661,410 shares. However, volume of 19.1 million shares or dollar volume of $129.88 million, has already exchanged hands through early trading on Tuesday.
Shares of R.R. Donnelley are rallying after the company announced that Chatham Asset Management has offered to acquire the remaining portion of the Company for $7.50 per share in cash. Chatham currently owns 14.9% of R.R. Donnelley’s outstanding common shares and is the Company’s largest bondholder.
Chatham Asset Management’s offer represents a 52.1% premium over the closing price on October 11, 2021 and a 92% premium over the 365-day volume-weighted average price (VWAP) of $3.91. The asset manager plans to finance the acquisition through cash on hand and external financing.
In conjunction with the acquisition offer, Chatham has offered to equitize its debt position in R.R. Donnelley, which would reduce the acquisition target’s debt by 23%. Chatham Asset Management estimates pro forma annual interest expenses would decline by $36 million or 33%.
“Despite our efforts to engage with the Board on ways to position the business for long-term success, we no longer have confidence in RRD’s ability to achieve full and fair value as a public company under the current Board and management team. As longstanding investors in RRD, we believe our offer presents the best path forward for the Company to unlock its intrinsic value, while also providing shareholders immediate and substantial cash,” said Chatham.
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