In light of Vista Outdoors’ ongoing discussions and review of strategic alternatives, the company announced on September 10, 2024 that it will adjourn the special meeting of stockholders which is scheduled to be held at 9:00 am CT on September 13, 2024 to a new date and time at 9:00 am CT on September 27, 2024. The Board continues to recommend Vista Outdoor stockholders vote in favor of the proposal to adopt the merger agreement with CSG at the Special Meeting.

The news of the latest adjournment of a special meeting of stockholders comes after MNC Capital Partners, LP, the investment firm that has stalked Vista Outdoor since mid-February 2024, again upped its offer to buy the outdoor hardgoods and accessories company, announcing on Monday, August 9, an all-cash offer of $43.00 per share, or $3.3 billion. Vista Outdoors, once again, pushed back on MNC for its communication and tactics.

The new offer made by MNC represents a 41.4 percent premium to the VSTO share price the day before its first offer and a 12.3 percent premium over VSTO’s closing price of 38.29 on Friday, September 6.

It is interesting to see the market close interest as VSTO shares declined almost 2 percent on Monday, September 9, after growing along with MNC offers over the last six months.

Before the initial release of information by MNC on the morning of March 1 that it had made an overture to Vista Outdoor on February 18 to acquire the company for $35.00 per share, or $2.9 billion, VSTO shares were trading down overnight at $30.42 on the New York Stock Exchange. Shares jumped to nearly $35.00 per share after MNC’s initial announcement but settled down to under $33.00 for most of that day.

The initial offer reportedly came a few weeks after Vista announced that it would close offices in Petaluma, CA; Overland Park, KS; Eagle, CO; and Madison, MS and consolidate its outdoor products segment across core locations, including:

  • The Adventure Sports platform, led by Jeff McGuane, consolidated in Irvine, CA, and includes the Fox Racing, Bell, Giro, CamelBak, QuietKat, and Blackburn brands;
  • The Outdoor Performance platform, led by Jordan Judd, to consolidate in Bozeman, MT, and includes the Simms, Bushnell, Blackhawk, Stone Glacier, Camp Chef, and Primos brands; and
  • The Precision Sports and Technology platform, led by Jon Watters and Scott Werbelow, to consolidate in San Diego, CA and includes the Foresight Sports, Bushnell Golf and Pinseeker brands.

Since then, Vista has rejected MNC’s overtures numerous times, with the investment firm continuing to return with higher bids, first in late March 2024 when MNC increased its offer at $37.50 per VSTO share. In early June, after being rejected, MNC offered $39.50 per share ($3.0 billion), and then again in late June at $42.00 a share ($3.2 billion).

To say that MNC has been aggressive in its effort to buy VSTO would be an understatement, and the firm has used the public nature of the Vista business to make its intentions known and pressure Vista to accept its offer.

While this has played out publicly, Vista had another Purchase and Merger Agreement with the Czechoslovak Group a.s. (CSG) to acquire the company’s ammunition-related businesses, which Vista now calls “The Kinetic Group.” CSG’s latest offer of $2.1 billion for that side of the business alone was accepted by Vista but never approved by shareholders.

Vista Outdoor “postponed“ the shareholder vote a number of times over a period in mid- to late-June while it attempted to gain votes for the CSG deal and finally adjourned its shareholder vote on the sale of The Kinetic Group to CSG and said it would instead pursue a more extensive review of “strategic alternatives,“ including selling its Revelyst (outdoor products) business and selling the company outright to MNC Capital.

Fast-forward to September 7, and MNC Capital Partners, LP issued another media release that it had sent a letter to Vista stating that “MNC is now prepared to offer an increased all-cash purchase price of $43.00 per share for Vista, despite substantial market headwinds for consumer spending and softness in Vista’s recent quarterly results.”

Revelyst outdoor segment sales declined 13.6 percent year-over-year to $274 million in the company’s fiscal first quarter ended June 30, while Kinetic’s Ammo Segment, which includes the Federal, Remington, CCI, Hevi-Shot, and Speer ammunition brands, saw sales decrease 1.6 percent to $370 million for the fiscal first quarter ended June 30.

Consolidated net income decreased to $57 million, or 8.9 percent of sales, in the fiscal first quarter. Consolidated EPS was 97 cents per diluted share in Q1, down 2.0 percent compared with 99 cents in the prior-year Q1 period. Adjusted EPS declined to $1.01, or down 6.5 percent, in Q1, compared with $1.08 in the prior-year Q1 period.

MNC said the letter, sent on Saturday, September 6, also included the following:

“Since the Vista Outdoor Inc. (“Vista”) Board of Directors (“Board”) determined on July 31 that MNC Capital’s (“MNC”) proposed acquisition of Vista would be expected to lead to a superior proposal to the CZECHOSLOVAK GROUP a.s. (“CSG”) transaction MNC and its partners and capital providers have completed their due diligence review in order to be in a position to make a revised offer. In addition, a Merger Agreement has been extensively negotiated and we are providing you with a Merger Agreement (with Schedules) that we are prepared to sign. You are also being provided with what is required as to our revised offer being fully financed.

“We believe that MNC’s acquisition of Vista (which would result in its ownership of The Kinetic Group (“Kinetic”)) and our partner’s acquisition of Revelyst is in the best interests of shareholders as well as Vista’s employees and other stakeholders. As a US-owned private company, Kinetic would not be subject to either the challenges of operating a sensitive business in the public markets or the potential degradation of its relationships with government and police institutions that would come under foreign ownership. Our partner has confidence in the Revelyst leadership team and its vision for the company. In addition to providing a large new equity infusion at closing, that partner is willing to provide a further equity commitment post-transaction to fuel a new chapter of growth for Revelyst.

“While we appreciate the efforts of Vista and its advisors over the past two weeks, the lack of engagement prior to then was disappointing. We also do not understand why the Vista Board did not terminate the CSG agreement when it could have, which means that Vista is required to give four business days’ notice to CSG before a deal can be signed with us. Also, the April 1 record date was kept, leaving open the possibility that a fifth attempt could be made to get shareholder approval for a CSG transaction that still includes highly speculative Revelyst shares. We do not see that shareholder approval ever occurring.”

The MNC letter ended by stating:

“Our revised offer is conditioned on the Vista Board, by Monday, September 9, having given notice to CSG that it intends to sign the Merger Agreement at $43.00 per share so that it can be signed by September 13. Otherwise, our revised offer will be withdrawn.”

In a response on Saturday, September 7, Vista Outdoor, Inc.’s Board of Directors responded to MNC Capital’s most recent communication and copied it in its own media release as follows:

“The Vista Outdoor Board of Directors has been negotiating extensively with MNC. Notwithstanding our good faith efforts, MNC sent the Board a revised proposal last evening after 10:00 PM ET that expires on Monday. The public communication by MNC only hours after delivery of the proposal as well as the Monday expiration continue a frustrating pattern and is not constructive. Vista Outdoor’s Board of Directors remains driven to maximize value for stockholders, will continue discussions with MNC and other parties, and looks forward to updating our stockholders in due course.”

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

Image courtesy Giro