It looks like another Board versus Investor fight is heating up as Vista Outdoor appears to be shunning an investor group’s indication of interest in acquiring the company for $2.9 billion. The publicized e-mail strings getting sent back and forth are reminiscent of the current happenings at Macy’s Inc. and Gildan Activewear.

The Vista Outdoor Inc. Board of Directors, following consultation with its financial and legal advisors, has rejected an unsolicited indication of interest received on February 19, 2024, from MNC Capital according to which MNC expressed interest in acquiring Vista Outdoor in an all-cash transaction for $35.00 per Vista share.

The Vista Outdoor Board also issued a letter to MNC which is included below.

The Vista Outdoor Board said in a Monday release that it continues to recommend the acquisition of the Sporting Products business by Czechoslovak Group a.s. and remains committed to the strategy of standing up the Outdoor Products business as a standalone public company to drive the greatest value for our stockholders.

The Monday release comes after MNC and Vista each reported on Friday regarding MNC’s indication of interest in acquiring the company.

The Board said the acquisition of the Sporting Products business by CSG is expected to close in the calendar year 2024, subject to approval of Vista Outdoor’s stockholders, receipt of necessary regulatory approvals,and other customary closing conditions.

“We have been actively engaged with the Committee on Foreign Investment in the United States (CFIUS) and our team is working with CFIUS to obtain its clearance,” the company wrote in the Monday statement. “As previously stated, we remain confident in our ability to receive all necessary regulatory approvals, including with respect to CFIUS, and to satisfy all closing conditions.”

Michael Callahan, chairman of the Vista Outdoor Board of Directors, offered, “Following a careful review with our experienced team of financial and legal advisors, the Board determined that the transaction contemplated by MNC Capital’s indication of interest significantly undervalues the Company and is not in the best interest of our stockholders. In particular, the indication of interest significantly undervalues the Revelyst business, which we expect to double standalone adjusted EBITDA in FY25 and achieve mid-teens adjusted EBITDA margin in the long term.1 The indication also lacks evidence of procured committed financing and is not reasonably capable of being completed. We take our fiduciary responsibilities seriously and are always open to opportunities that maximize stockholder value.

“We continue to firmly believe that our pending transaction with CSG and the separation of Revelyst as a standalone public company will drive significantly greater value for our stockholders. CSG is fully committed to Sporting Products’ iconic American brands and expanding our legacy of U.S. manufacturing, support for military and law enforcement customers, and investments in conservation and our hunting and shooting heritage. At the same time, Revelyst is poised to leverage meticulous craftsmanship and cross-collaboration across its portfolio of category-defining brands as a standalone public company. We are confident that this is the best path to unlock value for our stockholders.”

The full text of the letter to MNC follows.

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March 4, 2024

MNC Capital
Attention: Mark Gottfredson

Mr. Gottfredson:

I am writing on behalf of Vista Outdoor Inc. (“Vista”) in response to MNC Capital’s (“MNC”) letters dated February 19, 2024 and February 28, 2024, expressing MNC’s interest in pursuing a transaction pursuant to which MNC would acquire Vista in an all-cash transaction for $35.00 per Vista share (the “MNC Indication”). We also refer to the agreement and plan of merger dated as of October 15, 2023, between Vista, Revelyst, Inc., CSG Elevate II Inc., CSG Elevate III Inc., and, solely for the purposes of the Guarantor Provisions as defined therein, CZECHOSLOVAK GROUP a.s. (the “CSG Merger Agreement”).

Vista’s Board of Directors (the “Board”) has carefully reviewed the MNC Indication in consultation with our financial advisors and outside legal counsel.

After a thorough evaluation of the merits and risks of the MNC Indication, the Board has determined that the MNC Indication would not be more favorable to Vista stockholders from a financial point of view than the transactions contemplated by the CSG Merger Agreement, is not reasonably capable of being completed and does not constitute a basis for engagement with MNC. The Board has therefore rejected the MNC Indication.

This determination by the Board was based on a number of factors, including that:

  • the consideration of $35.00 in cash per Vista share in the MNC Indication significantly undervalues Vista;
  • the MNC Indication does not take into account the significant stockholder value that is expected to be created by the separation of the Outdoor Products and Sporting Products segments of Vista into two independent companies, each with its own dedicated strategic focus, enhanced ability to attract and retain top talent, tailored capital allocation philosophy, and set of competitive advantages;
  • the MNC Indication provides no evidence whatsoever that MNC has procured committed financing. This is particularly concerning in light of MNC’s repeated failure to deliver executed debt commitment letters with respect to the debt financing contemplated by the proposals it made in September and October 2023 to acquire Vista’s Sporting Products business;
  • the MNC Indication notes that it is subject to further diligence by MNC and its advisors without any indication of specific diligence requests or the anticipated timeframe for completing such diligence;
  • the MNC Indication does not provide adequate detail with respect to the proposed transaction, including, among other things, with respect to contractual terms.

In light of these concerns, as well as the lack of compelling value in the MNC Indication, we continue to believe that our pending transaction with CSG will drive significantly greater value for our stockholders.

The Board takes its fiduciary responsibilities seriously and is deeply committed to maximizing value for all of our stockholders. The Board is always receptive to opportunities that will help us achieve that goal.

Regards,

Michael Callahan
Chairman of the Board of Directors of Vista Outdoor Inc.

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The company said that Vista Outdoor stockholders do not need to take any action at this time.

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

Image courtesy Vista Outdoor/Stone Glacier

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See below for additional SGB Media coverage of MNC’s initial overture and Vista’s response.

EXEC: Vista Outdoor Fields $2.9 Bn Offer to Acquire Company in All-Cash Deal