Tuesday, Vista Outdoor Inc . (NYSE:VSTO) maintained its Neutral rating with a steady price target of $43.00, following the announcement of its definitive agreement to sell Revelyst to Strategic Value Partners LLC (SVP) in an all-cash transaction valued at $1.125 billion.
The company also updated the sale price of its Camp Chef brand, Kinetic, to Strategic Value Partners LLC for $2.225 billion. As a result of these transactions, shareholders are expected to receive approximately $45 per share.
The agreement to sell Revelyst marks a significant move for Vista Outdoor, with the acquisition anticipated to close by January 2025. The sale of Kinetic is still on track to be finalized before the end of 2024. These developments come after a noticeable shift in Vista Outdoor's investor base towards event-driven investors in recent months, with fundamental investors expressing concerns over long-term targets and the valuation of Revelyst.
The Revelyst transaction reflects a valuation that is approximately 10 times the fiscal year 2026 adjusted EBITDA estimate of $110 million. This exceeds the roughly 8 times multiple used in the price target methodology and is at the higher end of the expected valuation range for the business. The sale is seen as a positive step, expected to deliver significant value back to the shareholders.
The transactions involving Revelyst and Kinetic are part of Vista Outdoor's strategic efforts to optimize its portfolio and maximize shareholder returns. The company's decision to sell these assets is in line with investor expectations for a considerable return on investment. The closing of these deals will be a key milestone for Vista Outdoor as it continues to navigate the dynamic outdoor products market.
In other recent news, Vista Outdoor Inc. has confirmed its plans to sell its business in two separate transactions totaling $3.35 billion. The company is set to sell its sporting goods division, Revelyst, to Strategic Value Partners (SVP) for $1.1 billion, and its ammunition unit, Kinetic, to Czechoslovak Group (CSG) for $2.2 billion.
The combined value of these deals sets the price of Vista at $45 per share, surpassing a competing offer from MNC Capital at $43 per share.
The transaction has received approval from Vista's board of directors, with the Revelyst sale expected to conclude by January, pending regulatory approvals and the finalization of the CSG transaction. In financial performance, Vista Outdoor reported a 7.1% decrease in total sales to $644.2 million and a 6.5% decline in earnings per share to $1.01. Despite these results, Revelyst is expected to double its Adjusted EBITDA sequentially for the quarter and the year.
In analyst opinions, Roth/MKM has downgraded Vista Outdoor's stock from Buy to Neutral. Meanwhile, Gates Capital Management, a significant shareholder, has urged Vista to pursue an all-cash sale of the entire company. These are the recent developments in Vista Outdoor Inc.'s operations.
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