ANOKA, Minn. - Vista Outdoor Inc . (NYSE: NYSE:VSTO) has urged its shareholders to vote in favor of a transaction with Czechoslovak Group a.s. (CSG) during the upcoming Special Meeting on July 23, 2024. The board has recommended the CSG deal, which values The Kinetic Group at $2.1 billion, over a lower bid from MNC Capital.
The company, which owns more than three dozen brands in the sporting and outdoor product sectors, including Federal Ammunition and CamelBak, has entered into an amendment with CSG that offers a purchase price increase of $190 million over the initial bid. This amendment also raises the cash consideration to $21.00 per share of Vista Outdoor common stock, an $8.10 increase per share from the first offer.
Shareholders will receive one share of Revelyst common stock and $21.00 in cash for each share of Vista Outdoor common stock if the CSG deal goes through. The transaction is expected to close in July 2024, subject to shareholder approval and customary closing conditions.
The board has conducted a competitive process to maximize shareholder value, engaging with 26 counterparties and ultimately deciding that the sale of The Kinetic Group to CSG and the separation of Revelyst as a standalone public company is the best option.
The company has highlighted Revelyst's projected growth and margin expansion, with an aim to double standalone Revelyst EBITDA in fiscal year 2025 and achieve more than $100 million in run-rate cost saving by fiscal year 2027.
Vista Outdoor's financial advisors have deemed the consideration in the CSG transaction fair from a financial point of view to the shareholders. In contrast, the board unanimously rejected MNC's final indication of interest to acquire Vista Outdoor for $42.00 per share, citing that it undervalues the company, particularly the Revelyst business, and involves significant execution risk.
The board's decision is based on a thorough review and evaluation of MNC's bid, which they believe is opportunistic and captures Revelyst’s value at a discount outside of a sale process. Furthermore, MNC's offer is subject to additional due diligence and involves new, undisclosed debt and equity partners. MNC has also indicated it will not raise its proposal further.
The company has received all necessary regulatory approvals for the merger with CSG and is prepared to close the deal, providing certainty and immediate value to shareholders. Voting against the CSG transaction does not guarantee negotiations with MNC will resume.
The information in this article is based on a press release statement from Vista Outdoor Inc.
In other recent news, Vista Outdoor Inc. made significant strides in its business operations. The company rejected the $3.2 billion buyout proposal from MNC Capital Partners, L.P., favoring instead an improved offer from Czechoslovak Group (CSG) for its ammunition division, Kinetic Group.
The increased bid from CSG, a defense firm based in Prague, now stands at $2.1 billion. This decision comes amid heightened demand for military supplies, underlining the strategic importance of Vista Outdoor's ammunition unit.
The company's shareholders are set to receive $21.00 in cash and one share of Revelyst common stock for each share they hold, pending approval at a special meeting. The sale of Kinetic Group to CSG has received regulatory approval from a U.S. government interagency committee, marking a crucial step towards finalizing the transaction.
In the backdrop of these developments, Vista Outdoor reported Q4 total sales of $2.75 billion, with adjusted EBITDA margins at 16.1%. Amidst the ongoing negotiations, analyst firms have updated their assessments. While Roth/MKM and B.Riley maintained a Buy rating on Vista Outdoor shares, Lake Street Capital Markets downgraded the company from Buy to Hold.
InvestingPro Insights
As Vista Outdoor Inc. (NYSE: VSTO) prepares for its pivotal shareholder meeting to decide on the proposed acquisition by Czechoslovak Group a.s. (CSG), investors are closely monitoring the company's financial health and market performance. According to InvestingPro, Vista Outdoor's market capitalization stands at a robust $2.17 billion USD, reflecting investor confidence in the company's market position.
An important metric for potential and current shareholders is the company's P/E (Price to Earnings) ratio. Vista Outdoor's adjusted P/E ratio for the last twelve months as of Q4 2024 is 11.2, which suggests a potential undervaluation compared to the industry average, especially when considering the company's expected net income growth this year, as highlighted by one of the InvestingPro Tips.
Another InvestingPro Tip worth noting is that Vista Outdoor has not been profitable over the last twelve months. However, analysts predict the company will return to profitability this year, which could be an encouraging sign for investors looking for long-term value. Moreover, the company's liquid assets surpass its short-term obligations, indicating a solid liquidity position that could support its operations and potential growth strategies post-acquisition.
Investors should also be aware that while Vista Outdoor does not pay a dividend, the company has experienced a large price uptick over the last six months, with a 31.53% total return, underscoring its strong market performance. Additionally, there are 8 more InvestingPro Tips available for Vista Outdoor, which can be accessed through InvestingPro's platform, providing deeper insights into the company's financials and future outlook.
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