And so, the saga may end next week. RRD says it will close the acquisition deal with Chatham the week of February 21st, 2022.  

                    “Under Chatham’s ownership, I expect that RRD will remain an industry leading marketing and business communications company…” Dan Knotts, RRD President and Chief Executive Officer

Expectations and hopes are both beliefs or wishes about the future. It will take more than wishing and hoping to cleave business units that should never have been acquired, and mend businesses that should be more successful. These are the tough decisions that face all the employees of RRD business units. Chatham, through due diligence, probably has the road map well defined. 

Dollars are the deciding factor. If a unit lost money but is in a market sector that is growing, some money will be spent to right the ship either through management restructure and/or capital investment. Business units that are not part of the vision Chatham sees as worthy, will either be sold to parties better able manage the operation or simply shuttered and taken as a loss. This last option is sad, but keener eyes on the economy and marketplace will result in a better, healthier company. And that is good.

The latest financials released by RRD has good news, such as organic growth. A tough achievement for 2021. Disturbing losses in the Digital Print and Fulfillment and Digital & Creative Solutions indicate RRD management has been behind the curve on what offers growth in the graphic communications markets. The sale of their global logistics unit and losses in supply chain management and business process outsourcing businesses show RRD is performing poorly in higher margin services. This is a puzzling decision becuase logistics are critical to a company that sells manufactured product, and are value-added services to the customer. Advantages from digital and creative services place a PSP further upstream in the decision-making chain where who gets the work is decided (and influenced). It must be assumed there is not enough management and sales fire power to nurture these opportunities.

With 39% of the revenue from Commercial Print, 20% in packaging and 14% in labels, the indication is too much concentration in a crowded market, and not enough in the growth areas. Packaging should be the big number with labels a close second. Commercial print should not be the lead dog driving the sled in a company as diverse as RRD. It would simply make sense that Chatham will see that this is an issue and seek to correct the imbalance as the highest priority.

The ugly side of an acquisition is what will happen through actions from competitors. Many interviewed have stated their intentions to go after valuable accounts, key personnel and openly challenge the stability and reliability of a company undergoing massive change. Financial stability aside, if there is no massive change, do not expect RRD to survive much longer. Chatham will endeavor, as would any investor, to make that change happen quickly, efficiently and with a keen eye on what the market demands. As stated earlier in this article, these changes should result in a healthier company. It will not happen without some pain.

NOTE: Chatham Asset Management LLC Chatham Asset Management is a hedge fund company based in Chatham, NJ. With about $3 billion in total assets under their watchful eyes. They were the largest stockholder of RRD prior to the anticipated close of this deal.