Vista Outdoor, Inc. is reporting that its Board of Directors unanimously recommended that stockholders vote for the recently revised and updated transaction with Czechoslovak Group a.s. (CSG) to acquire The Kinetic Group and invest in Revelyst, and unanimously rejected the last proposal from MNC Capital (MNC).

Board Determination Follows Process that Yields Compelling Stockholder Value
The Board reported it has steadfastly committed to maximizing value for Vista Outdoor stockholders and has consistently taken action to achieve this goal.

After the company announced its intention to separate its outdoor products segment and ammunition segment Revelyst and The Kinetic Group in May 2022, the Board undertook a thorough process to unlock stockholder value, engaging with 26 counterparties that were each given fair and full consideration.

Over the past six weeks, as part of its subsequent review of strategic alternatives, Vista Outdoor has engaged in discussions with multiple interested parties, including extensively negotiating with MNC and CSG to deliver value to stockholders.

Ultimately, CSG agreed to acquire The Kinetic Group for $2.15 billion, which is ~$250 million higher than the implied valuation of MNC’s last proposal and agreed to purchase shares representing 7.5 percent of standalone Revelyst for $150 million, valuing Revelyst at $2.0 billion.

At the closing of the CSG Transaction, Vista Outdoor stockholders will receive $28 in cash per share and one share of Revelyst common stock for each share of Vista Outdoor common stock.

Active Discussions with MNC PE Partner to Separately Acquire Revelyst
On September 15, the Private Equity Firm partnered with MNC and reportedly contacted Vista Outdoor. The company said it had subsequently been in active dialogue with the private equity firm regarding a potential acquisition of Revelyst, separate from MNC. While no agreement has been reached, the Board will continue its discussions with the private equity firm. An agreement could be reached in conjunction with or independent of the CSG Transaction.

The Board is confident that the CSG Transaction, which crystallizes value for the Kinetic Group that is ~$250 million higher than the value implied in MNC’s last proposal and enables stockholders to retain the ability to realize a potential change of control premium for Revelyst, including if an agreement is reached with the private equity firm), is the optimal path to deliver the highest value to Vista Outdoor stockholders.

For more details on the CSG proposed transaction, see additional coverage below.

Board Unanimously Rejects MNC Proposal That Undervalues Vista Outdoor
Over the past six weeks, Vista Outdoor has provided MNC with access to almost 900 documents, complied with ~270 data requests, and held 12 diligence meetings. Throughout Vista Outdoor’s entire engagement with MNC, MNC was provided access to ~5,800 documents, received responses to ~1,300 data requests and participated in over 50 diligence meetings.

After this extensive engagement with MNC, Vista Outdoor received a revised proposal from MNC to acquire the company for $43 in cash per share. Following consultation with its financial and legal advisors, the Board unanimously rejected this last MNC proposal and determined that it would not be more favorable to Vista Outdoor stockholders financially than the CSG Transaction.

MNC’s proposal undervalues the company and deprives the company’s stockholders of the value opportunity Revelyst presents as a standalone company.

MNC’s proposal implies an enterprise value of ~$1.9 billion for The Kinetic Group and ~$1.2 billion for Revelyst.1 In comparison, the CSG Transaction represents an enterprise value of $2.15 billion for The Kinetic Group and an investment in Revelyst at a value of $2.0 billion.

Vista Outdoor urged MNC to submit its best and final proposal by Tuesday, September 17, but MNC did not provide an improved offer.

Morgan Stanley & Co. LLC is acting as sole financial adviser to Vista Outdoor. Cravath, Swaine & Moore LLP is acting as legal adviser to Vista Outdoor. Moelis & Company, LLC is acting as sole financial adviser to the independent directors of Vista Outdoor. Gibson, Dunn & Crutcher, LLP is acting as legal adviser to the independent directors of Vista Outdoor.

Image courtesy Vista Outdoor

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