June 5, 2018
The Board of Directors
Donnelley Financial Solutions, Inc.
35 West Wacker Drive
Chicago, IL 60601
RE: Shareholder request for special committee to seek strategic alternatives for Donnelley Financial Solutions (the “Company”)
Dear Members of the Board:
We appreciate the recent investor day you held in New York. However, as evident in the continued decline of your stock, the market and shareholders are not impressed with the progress or management’s ability to communicate a clear path forward. The Board must be proactive in evaluating management and holding them accountable on their ability to navigate this valuable business and communicate effectively with the investment community.
The two year mark for the Company’s spinoff is rapidly approaching, and the stock is now down more than 47% over this period during which time the S&P 500 Index is up over 26%. The stock is valued at approximately 5x EV/EBITDA and 0.5x Price to Revenue, which is a massive disconnect from your competitors that range from 11x to 17x EV/EBITDA and 3.3x – 5x Price to Revenue. We believe the Board must consider next steps for unlocking value, as the current plan is clearly not working.
As we have stated before, we believe Donnelley is worth considerably more than the current price and multiples imply, and that additional steps are needed to surface this value. As such, we urge the Board to voluntarily form a special committee to seek strategic alternatives and commence a formal solicitation process that includes all potential strategic and financial suitors.
H. Kevin Byun
Denali Investors, LLC
SOURCE Denali Investors