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Why is R. R. Donnelley & Sons Company (RRD) stock Popping High today?

R.R. Donnelley & Sons Company (RRD) stock was popping high today after it received an acquisition offer from Chatham Asset Management. RRD stock price saw a surge of 38.95% to reach $6.85 a share at the time of this writing. The trading volume as of now was 9,976,351, far higher than the average trading volume. Let’s deep dive to explore more of it.


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R.R. Donnelley & Sons Company is engaged in the business that enables organizations and firms to create, deliver, manage and optimize their multichannel marketing and business communications. The company is currently operational in United States, Asia, Europe, and across the globe. It was founded in 1864 and its headquarters are in Chicago, Illinois.

What’s Happening?

Chatham Asset Management, the largest bondholder of R.R. Donnelley & Sons stock today sent the letter to the board of directors of RRD stock. In the letter, Chatham put forward the offer to acquire all common stock of R. R Donnelley at a purchase price of $7.50 per share in cash.

The transaction represents a 52.1% premium over the previous closing price which was $4.93 per share and a 6.2% premium over the 52-week high of $7.06 per share. Chatham will fund the transaction via cash on hand and external funding. Jefferies Group LLC is supporting Chatham in its ability to raise all the necessary funds.

Financial View of RRD stock:

  • In the second quarter of 2021ss financial results, the company reported $1.15 billion in revenue in net sales. This represents an increase of $136.0 million or 13.5% from the same tenure of the previous year.
  • The stock reported an 11.4% increase in the organic net sales and the Business Service segment grew by 14.3% on a GAAP basis and 11.6% on a non-GAAP organic basis from the second quarter of 2020. RRD stock reported 10.3% growth in its Marketing Solutions segment based on both GAAP and non-GAAP organic basis from the second quarter of 2020.
  • RRD stock generated $28.2 million in income from operations in the second quarter of 2021. This compares to the $19.0 million loss from operations in the same period of the previous year.
  • Non-GAAP net income from operations increased $20.1 million to reach $41.0 million in the second quarter of 2021 from the second quarter of 2020.
  • RRD stock suffered a $0.13 loss per share from continuing operations as compared to a $0.79 loss per share in Q2,2020.

Conclusion:

Investors are responding positively to the RRD stock after the recent acquisition offer it received from Chatham Asset Management. The stock has performed well in the ongoing year as it gained almost 166% year to date. In a nutshell, investors need to keep an eye on this stock.

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