MNC Capital Partners, L.P. has submitted an increased all-cash proposal to acquire all of the outstanding shares of Vista Outdoor, Inc. for $39.50 per share, or over $3.0 billion.
The revised proposal represents a premium of 46 percent to the VWAP from when Vista’s transaction with the Czechoslovak Group a.s. (CSG) was announced on October 16, 2023, to the last closing price before MNC’s initial offer on February 19, 2024. The revised offer is also said to be more than a 30 percent premium to the last closing price before MNC’s initial offer.
Additionally, the latest offer implies a value for Revelyst, the company’s outdoor segment, of over $1 billion, as compared to Vista’s valuation for Revelyst of $570 million disclosed in its own investor presentation on February 1, 2024.
MNC said it wrote to the Vista Board on May 17, 2024 that it was on a path to increase its offer, but it required additional information to be able to do so. Much of that information was not provided, including the fees and expenses of Vista’s bankers, lawyers, and other transaction advisors, as well as the amount of additional payments Vista planned on making to employees above what was disclosed for the sale of Kinetic, the company’s ammunition segment.
MNC’s revised offer is based on the Transaction Expenses being $50 million and will be adjusted up or down based on the actual amount of Transaction Expenses.
MNC asserts in its latest communication that, while Vista stated that a price increase by MNC was warranted because of cash generation and debt pay-down, that value was already reflected in MNC’s initial proposal. MNC noted that much of the cash generation is related to inventory reduction and that working capital changes do not change the company’s value.
MNC said it believes that absent its interest in an acquisition, Vista’s share price would trade back to where it was before MNC’s initial offer, which was below $30.00 per share, evidenced by Vista’s share price decline of 3 percent, or $1.00 per share, following Vista Board’s rejection on May 28, 2024 of MNC’s prior proposal.
MNC asserted that from May 17 until May 28, Vista not only failed to provide needed due diligence, it also did not respond to the merger agreement that MNC had sent the company.
MNC said in its note that its revised proposal is not subject to any financing conditions and that the financing structure remains the same. Alongside the revised proposal, MNC has provided Vista with debt commitment papers with terms ready to be executed upon receipt of the lender’s requested due diligence information.
“MNC is proud to represent an American alternative. Our proposal provides compelling value and certainty for Vista shareholders and is in the best interests of Vista’s employees and the broader safety and security of the U.S. We have confidence in the management of both the Kinetic Group and Revelyst and expect to work closely with them to achieve the full potential of both companies,” said Mark Gottfredson, managing director, MNC Capital.
Image courtesy Vista Outdoor
