Vista Outdoor, Inc.’s Board of Directors issued an open letter dated Wednesday, July 10, to Vista Outdoor shareholders concerning its upcoming Special Meeting of Stockholders on July 23, 2024. The full text of the letter reads as follows.


Dear Vista Outdoor Stockholders,

As members of Vista Outdoor’s Board of Directors and fellow stockholders, we are writing to you about an important decision you will be making at our July 23, 2024 Special Meeting. Our Board has been – and will continue to be – steadfast and singularly focused on maximizing value for Vista Outdoor’s stockholders.

As the upcoming Special Meeting is fast approaching, we believe you all deserve to have a clear understanding of the robust process we underwent to extract tremendous value for The Kinetic Group on behalf of our stockholders and why we are confident this is the best choice for our stockholders by locking in the $2.1 billion dollar value of The Kinetic Group and providing our stockholders the opportunity to participate in Revelyst’s projected growth and margin expansion.

Board Engaged in Thorough Competitive Process to Maximize Stockholder Value
As you know, we announced the separation of our Outdoor Products and Sporting Products segments in May 2022 in order to optimize both businesses. That resulted in a thorough process that commenced in September 2022 to review several alternatives for unlocking stockholder value. We engaged with 26 counterparties, including 14 strategics and 12 sponsors, that were each given fair and full consideration. As part of this process, Vista Outdoor engaged extensively with MNC Capital (“MNC”), including providing MNC access to approximately 4,900 documents, answering over 1,050 data requests, holding over 35 meetings or calls, giving extensive access to the management team and supporting multiple site tours.

Following this competitive and thorough process and in consultation with our leading financial and legal advisors, we ultimately concluded the sale of The Kinetic Group to Czechoslovak Group a.s. (“CSG”) (the “CSG Transaction”) and the separation of Revelyst as a standalone public company is the best path to unlock value for our stockholders. We stand by our recommendation to vote “FOR” the CSG Transaction at the upcoming Special Meeting.

A Vote “For” CSG Transaction will Deliver Compelling Value fr Stockholders and Certainty to Close
On July 8, 2024, we entered into an amendment to the merger agreement with CSG, which increased the purchase price for the acquisition of The Kinetic Group to $2.1 billion (an increase of $190 million since CSG’s original purchase price) and increased the cash consideration to $21.00 per share of Vista Outdoor common stock (an increase of $8.10 per share since the original cash consideration). As a result of the CSG Transaction, stockholders will receive one share of Revelyst common stock and $21.00 in cash, in each case, per share of Vista Outdoor common stock.

A vote “FOR” the CSG Transaction is a vote for:

  • Maximizing the value of The Kinetic Group business which was the objective the Board set out to achieve all along since we announced the plan to separate the businesses in May 2022. CSG’s $2.1 billion purchase price represents a robust value for the Kinetic Group, resulting from a thorough and competitive process.
  • Enabling stockholders to participate in standalone Revelyst. As a result of the CSG Transaction, Vista Outdoor stockholders will become stockholders of Revelyst and have the ability to participate in the projected growth of Revelyst. The company reaffirmed its annual guidance to double standalone Revelyst EBITDA in fiscal year 2025 with a clear path to achieve more than $100 million in run-rate cost saving by fiscal year 2027 and mid-teens EBITDA margins long-term. As a pure-play standalone outdoor company, there is significant opportunity for Revelyst to realize superior value for stockholders when separated from The Kinetic Group, with expanded strategic opportunities and the strengthened ability to attract and retain talent.
  • Deal certainty and ability to close in July. Vista Outdoor and CSG have received all regulatory approvals required under the merger agreement and are prepared to close in July 2024, subject to receipt of stockholder approval and satisfaction of other customary closing conditions.
  • The Board is open-minded and committed to maximizing value of Revelyst, just as we demonstrated with our ability to maximize value for The Kinetic Group. A standalone Revelyst will benefit from being able to attract its natural owners, and as a result of the CSG Transaction, stockholders retain the ability to realize a potential change of control premium for Revelyst in the future. Weare always open to opportunities to maximize stockholder value and may consider pursuing a range of strategic alternatives for Revelyst at the appropriate time and at the appropriate valuation. The Board believes that, if it were strategically beneficial to sell Revelyst, the Board would engage in a thorough and competitive process to do so in order to maximize value for stockholders, just like the Board has done with respect to The Kinetic Group.

Vista Outdoor’s financial advisors each delivered an opinion as to the fairness, from a financial point of view, of the consideration in the CSG Transaction to the stockholders of Vista Outdoor’s common stock. We are confident the CSG Transaction is the most compelling for stockholders.

A Vote Against the CSG Transaction Does Not Mean we will Negotiate with MNC Capital
The Board thoroughly reviewed and evaluated MNC’s final indication of interest to acquire Vista Outdoor in an all-cash transaction for $42.00 per share (the “MNC Final Indication”). Following consultation with its financial and legal advisors, the Board unanimously rejected MNC’s best and final indication of interest, which:

  • Is inadequate and fundamentally undervalues Vista Outdoor, especially the Revelyst business. The MNC Final Indication is opportunistic and seeks to capture Revelyst’s value at a discount outside of a sale process. It does not take into account the significant projected EBITDA expansion at Revelyst under new management or the ability for Vista Outdoor stockholders to realize a potential change of control premium for Revelyst in the future. The CSG Transaction delivers $7-$16 per share more value to stockholders than the MNC Final Indication.
  • Involves significant execution risk and would take several months to close. MNC’s Final Indication still remains subject to additional due diligence despite having engaged with MNC for six weeks in May and June 2024 (in addition to the extensive engagement prior to signing the CSG merger agreement). Additionally, its financing includes new debt and equity partners relative to their prior offer, none of which have been publicly disclosed to the stockholders, as would be customary in similar transactions. In addition, you should know that MNC has never completed a transaction.
  • There is no guarantee that MNC will maintain its $42 per share offer – especially in the absence of competition if stockholders vote against the CSG Transaction. MNC has stood in the way of other competition throughout this process.
  • The Board determined there is no basis to engage with MNC regarding its final indication of interest given MNC indicated that it “cannot see any possible basis or reason to further raise [its proposal].”
  • Importantly, voting against the CSG Transaction at the Special Meeting does NOT mean the Board will decide to negotiate or resume discussions with MNC for the reasons stated above. If the CSG Transaction is not approved at the Special Meeting, the Board will need to consider all strategic alternatives available to Vista Outdoor at that time, in accordance with our fiduciary duties.

Each of Vista Outdoor’s financial advisors has delivered an opinion that the MNC Final Indication is inadequate, from a financial point of view to the holders of Vista Outdoor’s common stock.

At Vista Outdoor’s upcoming Special Meeting on July 23, 2024, you will be asked to make an important decision regarding the future of your investment. The Board of Directors unanimously recommends that you vote “FOR” the CSG Transaction. We firmly believe this transaction provides compelling value and is in the best interest of all Vista Outdoor stockholders.

Vista Outdoor Inc.’s Board of Directors
By Michael Callahan, Chairman of the Board of Directors

* * *

The special meeting of Vista Outdoor stockholders will, among other things, vote on a proposal to adopt the merger agreement with CSG, is scheduled to be held virtually on July 23, 2024, at 9:00 a.m. CST. Additional information is available in Vista Outdoor’s proxy statement/prospectus and the supplements filed with the U.S. Securities and Exchange Commission, including the most recent supplement to the proxy statement/prospectus dated June 8, 2024.

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 CSG