MNC Capital Partners, L.P. (MNC) submitted an increased all-cash proposal to acquire Vista Outdoor, Inc. for $37.50 per share, or approximately $3.0 billion. 

Vista’s shares were trading below $30.00 per share when MNC made its initial proposal on February 19, 2024. MNC reported that its $37.50 per share proposal values Revelyst at $1.1 billion, a 93 percent premium to Vista’s own $570 million implied Revelyst standalone value from its Investor Presentation dated February 1, 2024.

The investment group said a transaction with MNC would not be subject to a financing contingency and would not be subject to CFIUS review. MNC provided Vista the details of its financing and all other information that Vista requested in its March 4, 2024 letter.

MNC stated that it expects Vista to promptly engage and agree to MNC’s proposal, which is in the best interest of Vista’s shareholders and employees. MNC said it is confident that Vista, including its management and employees, will have a “bright future as a private company, and it appreciates the complementary portfolio of brands and assets within The Kinetic Group and Revelyst.”

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

The Board said in a release in early March that it continues to recommend the acquisition of the Sporting Products/The Kinetic Group/ammo business by Czechoslovak Group a.s. (CSG) and remains committed to standing up the Outdoor Products/Revelyst business as a standalone public company to drive the greatest value for its stockholders.

In its initial letter of interest, MNC argued that the Vista deal to sell the ammunition businesses to CSG could be a national security issue.

“The Sporting Products business is a national asset, evidenced by its significant ammunition and primer manufacturing capabilities and its key role in refilling the U.S. Defense Department and local law enforcement stockpiles,” wrote Mark Gottfredson from MNC Capital in a letter to Vista. “These capabilities are even more important today, given U.S. ammunition shortages and increasing demand from U.S. and NATO allies abroad. This transaction would allow the business to stay American-owned with a long-term U.S. owner who is aligned with the interests of America’s national security and consumers and no need for the CFIUS (Committee on Foreign Investment in the United States) review. As you are aware, this view has been publicly expressed by public officials, including a former United States Secretary of State. We are proud to represent an American alternative to the currently contemplated sale to a foreign entity.”

Regarding the Revelyst, or Outdoor Products segment, MNC took issue here, too, writing at the time: “The announced divestiture of the Sporting Products business provides limited liquidity and certainty to public Vista shareholders, leaving Outdoor Products as a subscale public company undergoing a critical multi-year turnaround plan. We strongly believe the next stage of Outdoor Products’ growth and development is best pursued and accelerated as a private company.”

MNC made an even earlier play to acquire the Sporting Products business from Vista, suggesting it had completed its due diligence and that segment of the business.

“These past efforts allow us to submit this letter with the intention to conduct expedited due diligence on the Outdoor Products segment only,” Gottfredson wrote.

Still, MNC made clear in its letters in February that its overture to Vista Outdoor was not binding but merely an indication of its interest in pursuing a deal. VSTO said in its release that, at that time, its stockholders did not need to take any action.

Vista Outdoor, Inc., for its part, continues to move along with its plan to sell the Sporting Products/The Kinetic Group/ammo business to CSG and has established the record date and meeting date for the special meeting of its stockholders to, among other things, consider and vote on a proposal to approve the sale of the company’s ammo business to Czechoslovak Group a.s. 

The Special Meeting will be held virtually on May 16, 2024, at 9:00 a.m. Central Time. Vista Outdoor’s stockholders of record, as of the close of business on April 1, 2024, will be entitled to vote at the Special Meeting.

In addition, the company is reporting that the U.S. Securities and Exchange Commission (SEC) has declared effective the registration statement on Form S-4 filed by its subsidiary Revelyst, Inc., in connection with the proposed acquisition of the company’s ammo business (The Kinetic Group) by CSG.

The company said the SEC determination is a key achievement in Vista Outdoor’s strategic plan to separate into two companies, sell off its ammo business, and move forward as an outdoor business under the Revelyst name without any firearms or ammo-related businesses under its umbrella.

“We are excited to reach this important milestone as we position The Kinetic Group and Revelyst for long-term success,” said Michael Callahan, the chair of Vista Outdoor Board of Directors. “We believe the proposed sale provides the best strategic alternative to maximize value for stockholders.

Callahan continued, “The Board remains steadfast in our support for the proposed transaction and the value it will create for our stockholders. CSG’s ownership of our American-based ammunition brands will provide the communities where our plants are located and our 4,000 workers here in the United States and The Kinetic Group’s experienced US-based executive management team with a steady, long-term owner that is fully committed to investing in the American workforce, American hunters and domestic and allied military and law enforcement partners. On the Revelyst side, with an energized senior management team, the GEAR Up transformation plan ensures that the segment is well-positioned to thrive as a standalone public company and deliver greater value for our stockholders.

“Our teams have dedicated significant time and energy preparing to transform Revelyst into a standalone publicly traded company, and we are excited for our brands, our employees and our stockholders to realize the benefits,” said Eric Nyman, CEO of Revelyst. “We have a clear line of sight to a solid foundation through the Gear Up transformation program, which is expected to drive $100 million of run-rate cost savings by fiscal year 2027. As we look ahead to Revelyst being a standalone company post-separation, our brand-led consumer-obsessed and maker-fueled culture is coming into shape. We are positioned well with winning brands, an efficient structure, a strong balance sheet post-separation and the right people to drive stockholder value.”

The company said the Registration Statement being declared effective by the SEC and the scheduling of the Special Meeting builds on the progress made in completing the transaction. 

On December 11, 2023, the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, or the HSR Act, expired. On January 5, 2024, the UK Investment Security Unit approved the transaction under the United Kingdom National Security and Investment Act of 2021. CSG and Vista Outdoor have filed a joint voluntary notice with the Committee on Foreign Investment in the United States, or CFIUS, with respect to the transaction and the teams continue to work with CFIUS to obtain its clearance.

“Revelyst’s registration statement being declared effective by the SEC moves The Kinetic Group one step closer to beginning our new chapter as part of CSG, which solidifies our strategic direction and will underpin investments in our employees, brands and local communities,” said Jason Vanderbrink, CEO of The Kinetic Group. “CSG is a strategic, long-term owner that is fully committed to our iconic American brands, our hunting and recreational shooting heritage and supporting our American and allied law enforcement and military partners. They are a highly successful global company with experience in our industry and are uniquely positioned to create and enhance American jobs by expanding our domestic production capabilities and global distribution network. We are excited for the opportunities that the CSG transaction will bring to our company and employees.”

The transaction remains subject to receipt of the remaining required regulatory approvals, the approval of Vista Outdoor’s stockholders and other customary closing conditions.

Image courtesy Camelbak