Vista Outdoor will move over the weekend to find a buyer for the Revelyst outdoor business and receive another higher offer for its Kinetic Group ammunition and firearms business. According to analysts following the stock, it should be enough to secure shareholder approval and avoid another hostile bid.

Over the weekend, Vista announced that it entered into a definitive agreement to sell the Revelyst business to Connecticut private equity firm Strategic Value Partners LLC (SVP) in an all-cash transaction for $1.125 billion.

Revelyst has three segments: Adventure Sports (Fox Racing, Bell, Giro, CamelBak, QuietKat, and Blackburn), Outdoor Performance (Simms, Bushnell, Blackhawk, Stone Glacier, Camp Chef, and Primos) and Precision Sports Technology (Foresight Sports, Bushnell Golf, and Pinseeker).

Meanwhile, the Czechoslovak Group (CSG) agreed, again, to up its offer to acquire the Kinetic Group for $2.225 billion. In its last offer on July 22, CSG agreed to acquire the Group for $2.15 billion. CSG, which received CFIUS approval for its purchase, will no longer take a 7.5 percent stake in Revelyst. Kinetic includes the Federal, Remington, CCI, Hevi-Shot, and Speer ammunition brands. As a result, the two transactions are expected to deliver approximately $45 a share to shareholders.

On Monday, shares of Vista jumped $4.17 to $44.01, or 10.5 percent.

The Revelyst acquisition is expected to close by January 2025, and the CSG transaction is still expected before the end of 2024.

The bidding war for all or parts of Vista’s businesses was sparked by Vista’s announcement in October 2023 to sell its ammunition and firearms business to CSG for $1.91 billion. Over the past year, other suitors, including private equity firm JDH Capital and firearms maker Colt CZ Group, arrived to make bids for all or parts of Vista’s business, but the most aggressive has been from MNC, which initially offered $35 a share in cash to acquire the entire company on March 1, 2024.

Jim Chartier at Monness, Crespi, Hardt & Co. said on Monday, October 7, before the market opened, he had downgraded Vista to “Neutral“ from “Buy“ as he does not anticipate a higher bid. He also noted that Vista shares had jumped to his $44 price target in pre-market trading and were sitting at 2 percent below the proposed price.

“The combined transactions equate to $45 per share in cash for Vista shareholders,“ wrote Chartier. “We believe this is the outcome Vista shareholders wanted and expect the deals will be approved. In addition, we do not anticipate a higher bid for either business.”

Anna Glaessgen, B. Riley Securities, likewise felt the bidding was done. In a note she issued on October 8, “Based on our conversations with investors, we’re fairly confident that the shareholder base, by and large, will be in favor of taking the $45 all-in; (1) the mix has shifted significantly toward event-driven investors over the past few months, and (2) fundamental investors have grown increasingly wary of the long-term targets anchoring the analysis of Revelyst’s perceived value.”

Glaessgen added that Revelyst’s valuation in the SVP transaction is “toward the high end of what we see as a likely valuation range for this business.“ She said the bid values Revelyst at about ten times B. Riley’s FY26 adjusted EBITDA estimate of $110 million, above the eight times B. Riley’s price target was based on.

On August 7, B. Riley reduced its rating on Vista to “Neutral“ from “Buy“ as the stock was trading at $38.40, approaching its peak during the pandemic and standing as an “extreme outlier“ to other stocks in the outdoor space that continues to trade well below peak pandemic levels.

Glaessgen also felt that the stock was less likely to be bid up by “event-driven news“ and recent price moves reflect the assumed probability of at least a $42-a-share takeout and the exploration of strategic alternatives. Her “Buy“ rating also “hinged upon the relatively low implied value of Revelyst,“ that now carried risks if a “sufficient bid“ for Revelyst (or the whole company) didn’t arrive.

Analysts at Roth-KMK reduced their rating on Vista on September 19 to “Neutral“ from “Buy“ following Vista’s issuing a release providing an update on the CSG and MNC proposals. At the time, Vista said its board had unanimously recommended shareholders vote for the latest CSG transaction while simultaneously rejecting MNC’s latest offer for $43 a share in cash.

Matt Koranda, lead analyst in the space at Roth, wrote that its upgrade from April 4, 2024, was forecasted on shares upside from the eventual closing of the CSG transaction or a takeout bid from MNC. He noted that subsequent higher offers from MNC have helped prop up the stock. With the stock having appreciated to within 10 percent of Roth’s target price of $42 “and another all-cash bid for the company seemingly less likely, we see few immediate upside catalysts for the stock,“ concluded Koranda.

Image courtesy Vista Outdoor