Vista Outdoor Reaffirms Recommendation for CSG
Transaction with Increased Purchase Price
Vista Outdoor Inc. (“Vista Outdoor” or the “Company”) (NYSE:
VSTO) today announced that its Board of Directors (the “Board”),
following consultation with its financial and legal advisors, has
rejected the unsolicited indication of interest received from MNC
Capital (“MNC”) on March 25, 2024 pursuant to which MNC expressed
interest in acquiring Vista Outdoor in an all-cash transaction for
$37.50 per Vista Outdoor share. The Board issued a letter to MNC
which is reproduced below.
Michael Callahan, Chairman of the Board, said, “After careful
review with our financial and legal advisors and deliberation, the
Board determined that the transaction contemplated by MNC’s
indication of interest significantly undervalues the Company.
Despite engaging with representatives of MNC over the past month,
including by providing substantial non-public information under a
non-disclosure agreement, we have not received an improved economic
proposal or committed financing. We take our fiduciary
responsibilities seriously and do not believe that the transaction
contemplated by MNC’s indication of interest is in the best
interest of our stockholders.”
The Board believes there is significantly more value in the
Revelyst business than MNC credited in its indication of interest.
The Company’s long term target of achieving mid-teens adjusted
EBITDA margin and its GEAR Up initiative are expected to
re-accelerate growth through increased investment in innovation and
its winning brands. The Company expects to drive a $100 million
improvement in adjusted EBITDA by FY27. Vista Outdoor is also well
on its way to deliver on the GEAR Up initiative and expects to
deliver $25-30 million in savings while doubling standalone
adjusted EBITDA in FY25. Additionally the Company’s strong cash
generation and pay down of total debt by $115 million in Q4 of FY24
reinforces the fact that the MNC indication of interest undervalues
the Revelyst business.
Mr. Callahan continued, “We firmly believe that our pending
transaction with CSG, which now includes an increased purchase
price, and the separation of Revelyst as a standalone public
company is the best path to drive greater value for our
stockholders.”
The Board continues to recommend the acquisition of The Kinetic
Group by Czechoslovak Group a.s. (“CSG”).
The full text of the letter to MNC follows:
May 28, 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 March
25, 2024, March 29, 2024, April 7, 2024 and May 17, 2024,
expressing MNC’s interest in pursuing a transaction pursuant to
which MNC would acquire Vista in an all-cash transaction for $37.50
per Vista share (the “MNC Revised 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 Revised Indication in consultation with
our financial advisors and outside legal counsel.
After a thorough evaluation of the merits and
risks of the MNC Revised Indication, the Board has determined that
the MNC Revised Indication would not be more favorable to Vista
stockholders from a financial point of view than, and would not
reasonably be expected to be superior to, the transactions
contemplated by the CSG Merger Agreement. The Board has therefore
rejected the MNC Revised Indication.
This determination by the Board was based on
a number of factors, including that the consideration of $37.50 in
cash per Vista Outdoor share in the MNC Revised Indication
significantly undervalues Vista and does not take into account the
significant stockholder value that is expected to be created by the
separation of Revelyst and The Kinetic Group into two independent
companies. This is further reinforced by the fact that Vista
Outdoor decreased its total debt by $115 million in Q4 of FY24,
that the Revelyst business is expected to double standalone
adjusted EBITDA in FY25 and achieve mid-teens EBITDA margin in the
long term and that Vista Outdoor is well on its way to delivering
on the GEAR Up initiative and is expecting to deliver $25-30
million in savings in FY25.
In light of the lack of compelling value in
the MNC Revised Indication and the fact that MNC has not delivered
an improved economic proposal, 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.
Morgan Stanley & Co. LLC is acting as 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 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.
About Vista Outdoor Inc.
Vista Outdoor (NYSE: VSTO) is the parent company of more than
three dozen renowned brands that design, manufacture and market
sporting and outdoor products. Brands include Bushnell, CamelBak,
Bushnell Golf, Foresight Sports, Fox Racing, Bell Helmets, Camp
Chef, Giro, Simms Fishing, QuietKat, Stone Glacier, Federal
Ammunition, Remington Ammunition and more. Our reporting segments,
Outdoor Products and Sporting Products, provide consumers with a
wide range of performance-driven, high-quality and innovative
outdoor and sporting products. For news and information, visit our
website at www.vistaoutdoor.com.
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP
financial measures that are not calculated in accordance with
Generally Accepted Accounting Principles (“GAAP”). Adjusted EBITDA
is defined as net income before other income/(expense), interest,
taxes, and depreciation and amortization, excluding the
nonrecurring and non-cash items referenced above. We calculate
“Adjusted EBITDA margins” as Adjusted EBITDA divided by net sales.
Adjusted EBITDA and adjusted EBITDA margin should be considered in
addition to, and not as a substitute for, GAAP measures. Vista
Outdoor’s definitions may differ from those used by other
companies.
Forward-Looking Statements
Some of the statements made and information contained in this
press release, excluding historical information, are
“forward-looking statements,” including those that discuss, among
other things: our plans, objectives, expectations, intentions,
strategies, goals, outlook or other non-historical matters;
projections with respect to future revenues, income, earnings per
share or other financial measures for Vista Outdoor; and the
assumptions that underlie these matters. The words “believe,”
“expect,” “anticipate,” “intend,” “aim,” “should” and similar
expressions are intended to identify such forward-looking
statements. To the extent that any such information is
forward-looking, it is intended to fit within the safe harbor for
forward-looking information provided by the Private Securities
Litigation Reform Act of 1995.
Numerous risks, uncertainties and other factors could cause our
actual results to differ materially from the expectations described
in such forward-looking statements, including the following: risks
related to the previously announced transaction among Vista
Outdoor, Revelyst, Inc., CSG Elevate II Inc., CSG Elevate III Inc.
and CZECHOSLOVAK GROUP a.s. (the “Transaction”), including (i) the
failure to receive, on a timely basis or otherwise, the required
approval of the Transaction by our stockholders, (ii) the
possibility that any or all of the various conditions to the
consummation of the Transaction may not be satisfied or waived,
including the failure to receive any required regulatory approvals
from any applicable governmental entities (or any conditions,
limitations or restrictions placed on such approvals), (iii) the
possibility that competing offers or acquisition proposals may be
made, (iv) the occurrence of any event, change or other
circumstance that could give rise to the termination of the merger
agreement relating to the Transaction, including in circumstances
which would require Vista Outdoor to pay a termination fee, (v) the
effect of the announcement or pendency of the Transaction on our
ability to attract, motivate or retain key executives and
employees, its ability to maintain relationships with its
customers, vendors, service providers and others with whom it does
business, or its operating results and business generally, (vi)
risks related to the Transaction diverting management’s attention
from our ongoing business operations and (vii) that the Transaction
may not achieve some or all of any anticipated benefits with
respect to either business segment and that the Transaction may not
be completed in accordance with our expected plans or anticipated
timelines, or at all; impacts from the COVID-19 pandemic on our
operations, the operations of our customers and suppliers and
general economic conditions; supplier capacity constraints,
production or shipping disruptions or quality or price issues
affecting our operating costs; the supply, availability and costs
of raw materials and components; increases in commodity, energy,
and production costs; seasonality and weather conditions; our
ability to complete acquisitions, realize expected benefits from
acquisitions and integrate acquired businesses; reductions in or
unexpected changes in or our inability to accurately forecast
demand for ammunition, accessories, or other outdoor sports and
recreation products; disruption in the service or significant
increase in the cost of our primary delivery and shipping services
for our products and components or a significant disruption at
shipping ports; risks associated with diversification into new
international and commercial markets, including regulatory
compliance; our ability to take advantage of growth opportunities
in international and commercial markets; our ability to obtain and
maintain licenses to third-party technology; our ability to attract
and retain key personnel; disruptions caused by catastrophic
events; risks associated with our sales to significant retail
customers, including unexpected cancellations, delays, and other
changes to purchase orders; our competitive environment; our
ability to adapt our products to changes in technology, the
marketplace and customer preferences, including our ability to
respond to shifting preferences of the end consumer from brick and
mortar retail to online retail; our ability to maintain and enhance
brand recognition and reputation; others’ use of social media to
disseminate negative commentary about us, our products, and
boycotts; the outcome of contingencies, including with respect to
litigation and other proceedings relating to intellectual property,
product liability, warranty liability, personal injury, and
environmental remediation; our ability to comply with extensive
federal, state and international laws, rules and regulations;
changes in laws, rules and regulations relating to our business,
such as federal and state ammunition regulations; risks associated
with cybersecurity and other industrial and physical security
threats; interest rate risk; changes in the current tariff
structures; changes in tax rules or pronouncements; capital market
volatility and the availability of financing; foreign currency
exchange rates and fluctuations in those rates; general economic
and business conditions in the United States and our markets
outside the United States, including as a result of the war in
Ukraine and the imposition of sanctions on Russia, the COVID-19
pandemic, conditions affecting employment levels, consumer
confidence and spending, conditions in the retail environment, and
other economic conditions affecting demand for our products and the
financial health of our customers.
You are cautioned not to place undue reliance on any
forward-looking statements we make, which are based only on
information currently available to us and speak only as of the date
hereof. A more detailed description of risk factors that may affect
our operating results can be found in Part 1, Item 1A, Risk
Factors, of our Annual Report on Form 10-K for fiscal year 2023, in
Part II, Item 1A, Risk Factors, of our Quarterly Report on Form
10-Q for the third quarter of fiscal year 2024, and in the filings
we make with Securities and Exchange Commission (the “SEC”) from
time to time. We undertake no obligation to update any
forward-looking statements, except as otherwise required by
law.
No Offer or Solicitation
This communication is neither an offer to sell, nor a
solicitation of an offer to buy any securities, the solicitation of
any vote, consent or approval in any jurisdiction pursuant to or in
connection with the proposed transaction or otherwise, nor shall
there be any sale, issuance or transfer of securities in any
jurisdiction in contravention of applicable law. No offer of
securities shall be made except by means of a prospectus meeting
the requirements of Section 10 of the Securities Act of 1933, as
amended, and otherwise in accordance with applicable law.
Additional Information and Where to Find It
These materials may be deemed to be solicitation material in
respect of the Transaction. In connection with the Transaction,
Revelyst, a subsidiary of Vista Outdoor, filed with the SEC a
registration statement on Form S-4 in connection with the proposed
issuance of shares of common stock of Revelyst to Vista Outdoor
stockholders pursuant to the Transaction, which Form S-4 includes a
proxy statement of Vista Outdoor that also constitutes a prospectus
of Revelyst (the “proxy statement/prospectus”). INVESTORS AND
STOCKHOLDERS ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH
THE SEC, INCLUDING OUR PROXY STATEMENT/PROSPECTUS, BECAUSE THEY
CONTAIN IMPORTANT INFORMATION ABOUT THE TRANSACTION AND THE PARTIES
TO THE TRANSACTION. The registration statement was declared
effective by the SEC on March 22, 2024, and we have mailed the
definitive proxy statement/prospectus to each of our stockholders
entitled to vote at the meeting relating to the approval of the
Transaction. Investors and stockholders may obtain the proxy
statement/prospectus and any other documents free of charge through
the SEC’s website at www.sec.gov. Copies of the documents filed
with the SEC by Vista Outdoor are available free of charge on our
website at www.vistaoutdoor.com.
Participants in Solicitation
Vista Outdoor, Revelyst, CSG Elevate II Inc., CSG Elevate III
Inc. and CZECHOSLOVAK GROUP a.s. and their respective directors,
executive officers and certain other members of management and
employees, under SEC rules, may be deemed to be “participants” in
the solicitation of proxies from our stockholders in respect of the
Transaction. Information about our directors and executive officers
is set forth in our proxy statement on Schedule 14A for its 2023
Annual Meeting of Stockholders, which was filed with the SEC on
June 12, 2023 and subsequent statements of changes in beneficial
ownership on file with the SEC. These documents are available free
of charge through the SEC’s website at www.sec.gov. Additional
information regarding the interests of potential participants in
the solicitation of proxies in connection with the Transaction,
which may, in some cases, be different than those of our
stockholders generally, is also included in the proxy
statement/prospectus relating to the Transaction.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240527521751/en/
Investor Contact: Tyler Lindwall Phone: 612-704-0147
Email: investor.relations@vistaoutdoor.com
Media Contact: Eric Smith Phone: 720-772-0877 Email:
media.relations@vistaoutdoor.com
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