Vista Outdoor Inc. reported that an “alternative party,” JDH Capital, withdrew its offer to acquire The Kinetic Group, Vista’s ammunition business. Vista reaffirmed its recommendation that Vista stockholders vote in favor of the proposed merger agreement with Czechoslovak Group a.s. (CSG).

On June 7, Vista said an unnamed U.S.-based private investment firm proposed to acquire The Kinetic Group for $2 billion in cash on a cash-free, debt-free basis.

Vista Outdoor also noted that the withdrawal was due to pressure from MNC Capital Partners, which had offered to acquire the company in its totality for over $3 billion.

In early June, Vista rejected an improved buy proposal from MNC.

Vista said it has learned that MNC has alleged that the alternative party violated certain contractual agreements between the alternative party and MNC that purportedly restricted the alternative party’s ability to submit an offer for The Kinetic Group. Vista Outdoor reported it only became aware of these agreements last week and understood they were entered into in connection with MNC’s and the alternative party’s consideration of a joint bid for The Kinetic Group as part of the prior sales process for that business in 2023. Vista Outdoor also understands that the alternative party disputes the merits of MNC’s allegations.

“While it is unfortunate that MNC apparently caused the alternative party’s indication of interest to be withdrawn, we firmly believe that completing the transaction with CSG will be a great outcome for our stockholders,” said Michael Callahan, chairman of the Board, Vista Outdoor, Inc. “CSG will be an excellent owner of The Kinetic Group with a strong commitment to U.S. manufacturing and its American workforce and deep expertise in supply chain excellence, ammunition manufacturing and support for NATO and allied nations. We look forward to a successful shareholder vote on July 2 and remain confident that the transaction with CSG will receive clearance from CFIUS.”

Sources told The Financial Times that the alternative bidder was JDH Capital, the investment group run by Texas oil billionaire Jeffrey Hildebrand. JDH Capital purchased Savage, the firearms manufacturer, from Vista in 2019 and, in April of this year, acquired Clarus’ Precision Sport segment, including Sierra Bullets and Barnes Bullets.

Vista added in its statement, “The Vista Outdoor Board takes its fiduciary responsibilities seriously and is deeply committed to maximizing value for all of Vista Outdoor’s stockholders. The Vista Outdoor Board is always receptive to opportunities that will help Vista Outdoor achieve that goal.”

Last October, Vista entered into a $1.91 billion deal to sell The Kinetic Group, which includes the Federal, Remington, CCI, Hevi-Shot, and Speer ammunition brands, to CSG. In late May, Vista confirmed that CSG raised its offer to acquire Kinetic by $50 million to $1.96 billion.

Following the sale, Vista plans to list its outdoor products business, Revelyst, separately as a standalone company.

Revelyst operates 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 and Technology (Foresight Sports, Bushnell Golf and Pinseeker).

Vista had adjourned a special meeting of shareholders to approve the CSG merger scheduled for June 14 until July 2 to explore the new bidder’s offer. The meeting was postponed from May 16, given the arrival of MNC’s offer.

Under CSG’s updated offer, the cash consideration to Vista Outdoor stockholders, payable as part of the spinoff, rose 24 percent, or $3.10 per share of Vista Outdoor common stock, from $12.90 to $16. Under the updated merger agreement with CSG, Vista Outdoor stockholders would receive at the transaction’s closing one share of the common stock of Revelyst and $16 in cash per share of Vista Outdoor common stock.

The CSG transaction is still expected to close in 2024, subject to the approval of Vista Outdoor’s stockholders and receipt of clearance by the Committee on Foreign Investment in the United States (CFIUS).

Vista Outdoor said it remains confident that it will receive clearance from CFIUS regarding the proposed transaction with CSG and that all other closing conditions will be satisfied.

Morgan Stanley & Co. LLC is the sole financial adviser to Vista Outdoor. Cravath, Swaine & Moore LLP is the legal adviser to Vista Outdoor. Moelis & Company LLC is acting as 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 Vista Outdoor