Vista Outdoor strikes deal to sell itself in two parts for $3.4 billion

Vista Outdoor

05/10/2024 02:30

By Anirban Sen and Abigail Summerville
       NEW YORK, Oct 4 (Reuters) - Vista Outdoor  VSTO.N  on
Friday agreed to sell itself in parts to two separate buyers for
a total of $3.35 billion, including debt, after fending off a
hostile suitor that pursued the sporting goods and ammunitions
maker for months.
    Vista struck a deal to sell its sporting goods unit Revelyst
to investment firm Strategic Value Partners for $1.1 billion,
according to a statement seen by Reuters. 
    It has also agreed to revise the terms of a previously
agreed deal to sell its ammunitions business Kinetic to
Prague-based defense contractor Czechoslovak Group (CSG). 
    CSG has raised its offer for Kinetic by $75 million to $2.2
billion. The company, which had initially also agreed to buy a
7.5% stake in Revelyst for $150 million, will no longer do so. 
    Taken together, the two deals value Vista at $45 per share,
topping a rival $43 per share offer from MNC Capital, an
investment firm led by former Vista board member Mark
Gottfredson. MNC has repeatedly attempted to acquire Vista this
year. 
    "The board has worked tirelessly to deliver maximum value to
its stockholders, and we are pleased to have reached this
agreement with SVP and CSG which helps us achieve that
objective," Michael Callahan, chairman of Vista's board of
directors, said in the statement. 
    The transaction has been approved by Vista's board of
directors. The sale of Revelyst is expected to close by January,
subject to regulatory approvals and the completion of the CSG
deal. 
    The complex transaction would need to go to Vista's
shareholders for a vote. 
    The company's earlier deal with CSG received mixed
recommendations from proxy advisory firms. Glass Lewis
recommended that Vista shareholders vote in favor of the
proposed merger of the ammunition unit with CSG, while
Institutional Shareholder Services recommended a vote against
that deal.
    Minnesota-based Vista is the parent of Federal Ammunition
and Remington Ammunition brands, while its outdoor-product
brands include Foresight Sports, CamelBak, Bushnell Golf and
Simms Fishing. 
    The months-long saga involving Vista and MNC has played out
against the backdrop of rising demand for military supplies
since the escalation of the Russia-Ukraine conflict in 2022.
    "With this investment, we plan to put SVP’s full operating
resources and network behind Revelyst to help accelerate the
success of this market leader,” said David Geenberg, head of
SVP’s North America corporate investment team. 
    
    BACK AND FORTH
    The bidding war for Vista kicked off earlier this year, with
Vista rebuffing multiple offers from MNC and supporting the bid
by CSG for Kinetic. In June, the CSG deal was cleared by the
Committee on Foreign Investment in the United States, which
reviews foreign investments over possible national security
concerns. Colleyville, Texas-based MNC had argued that a
transaction with CSG would pose a national security threat.
    In July, Vista launched a strategic review to explore all
its options, after failing to gather investor support for the
CSG deal. The company was forced to postpone a shareholder vote
to approve the deal with CSG several times in recent months in
its attempts to fight off MNC's repeated overtures.
    In September, MNC submitted a revised offer worth $3.2
billion, including debt, and said it would partner with an
unnamed private equity firm that would own the Revelyst business
to help finance its bid. Vista later separately engaged with the
private equity firm, which sources said was Strategic Value
Partners, on a deal for the sporting goods business. 
    Vista Outdoor's shares, which have risen about 35% from the
beginning of the year, closed at $39.84 on Friday, giving the
company a market value of about $2.33 billion.  
    SVP, which was launched by investor Victor Khosla in 2001,
has about $19 billion of assets under management. 
    Morgan Stanley advised Vista on the deal, while Moelis
advised the company's board. Goldman Sachs advised SVP, while
JPMorgan advised CSG. 

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 (Reporting by Anirban Sen and Abigail Summerville in New York;
Editing by Leslie Adler)
 ((Anirban.Sen@thomsonreuters.com; Twitter: @asenjourno; Reuters
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