MNC Capital Submits Proposal to Acquire Vista Outdoor for $35.00 Per Share in Cash
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Insights
The acquisition proposal by MNC Capital Partners to purchase Vista Outdoor Inc. for $35.00 per share represents a significant premium over the current market price, which was under $30.00 at the time of the offer. Such a premium is indicative of MNC's valuation of Vista's intrinsic value and future growth potential. The all-cash nature of the deal simplifies the transaction and avoids the dilution of existing shareholders' equity, which could be a favorable factor for share valuation.
Furthermore, the transaction avoids regulatory risks, such as CFIUS review, which can be a lengthy and uncertain process. This is particularly relevant given the national security implications of the Sporting Products division, which manufactures ammunition and primers for the U.S. Defense Department and law enforcement. The lack of regulatory hurdles could expedite the acquisition and reduce uncertainty for investors.
However, investors should consider the potential impact of the acquisition on the company's operational strategy, especially concerning the Outdoor Products division, which is facing a turnaround plan. If the acquisition leads to enhanced focus and investment in this area, it could potentially yield positive outcomes for the long-term growth of the business.
The proposed acquisition of Vista Outdoor by MNC Capital Partners underscores a strategic move in the outdoor sports and recreation market. The offer suggests confidence in Vista's Sporting Products and Outdoor Products divisions, despite the latter undergoing a turnaround strategy. The move to keep the Sporting Products division American-owned aligns with a growing trend of national security considerations in business transactions, especially in industries with defense applications.
From a market perspective, the acquisition could lead to a consolidation in the industry, potentially increasing market share and pricing power for the combined entity. However, it is also important to monitor the response from competitors and the broader market, as this could lead to increased competitive pressures or trigger further industry consolidation.
The emphasis on avoiding CFIUS review in the acquisition proposal is a strategic legal consideration by MNC Capital Partners. CFIUS is tasked with reviewing transactions that could result in control of a U.S. business by a foreign entity, especially where national security is concerned. By presenting an all-American acquisition, MNC circumvents potential legal challenges and public scrutiny that could arise from the sale of Vista's Sporting Products division to a foreign company.
Additionally, the proposal's timing, following the announcement of the sale of The Kinetic Group and the separation of Revelyst, Inc., could raise questions about the fiduciary duties of Vista's board to its shareholders. The board must carefully evaluate the MNC proposal against the current transaction to determine which option maximizes shareholder value, considering both immediate financial gain and long-term strategic positioning.
Offer Submitted February 19, 2024
MNC submitted a proposal on February 19, 2024, to which Vista Outdoor responded on February 26, 2024.
MNC sent a follow up letter on February 28, 2024, to which Vista Outdoor responded on February 29, 2024.
The full text of these letters and responses can be found below.
Contact (For Press Inquiries Only):
Bob Christie
Brunswick Group
917-860-9410
On behalf of MNC Capital Partners, L.P.: https://mnccapitalpartners.com/
MNC PROPOSAL
February 19, 2024
Members of the Board of Directors
C/O Mr. Michael
Vista Outdoor Inc.
1 Vista Way
STRICTLY PRIVATE AND CONFIDENTIAL
Dear Michael:
We are writing to express our strong interest in acquiring all the outstanding shares of Vista Outdoor Inc. (“Vista” or the “Company”) for a purchase price per share of
Key considerations of our proposal include:
-
All-cash: All-cash acquisition for
100% of the Company. -
Regulatory Considerations: No regulatory risk and no Committee on Foreign Investment in
the United States (“CFIUS”) review; unlike the current proposed transaction for the Sporting Products business. -
Sporting Products: The Sporting Products business is a national asset, evidenced by its significant ammunition and primer manufacturing capabilities and its key role in refilling the
U.S. Defense Department and local law enforcement stockpiles. These capabilities are even more important today, givenU.S. ammunition shortages and increasing demand fromU.S. and NATO allies abroad. This transaction would allow the business to stay American-owned with a long-termU.S. owner who is aligned with the interests of America’s national security and consumers; and no need for CFIUS review. As you are aware, this view has been publicly expressed by public officials including a formerUnited States Secretary of State. We are proud to represent an American alternative to the currently contemplated sale to a foreign entity. - Outdoor Products: The announced divestiture of the Sporting Products business provides limited liquidity and certainty to public Vista shareholders, leaving Outdoor Products as a subscale public company undergoing a critical multi-year turnaround plan. We strongly believe the next stage of Outdoor Products’ growth and development is best pursued and accelerated as a private company.
Before turning to specific elements of our proposal, it is important to note that we at MNC Capital (“MNC”) have long followed, and care deeply about being the best steward of Vista’s entire portfolio of leading brands. We are excited to pursue the offer described below to acquire the Company, which provides the Company’s shareholders with a very attractive valuation for the business as well as a high degree of speed and certainty to consummate the Transaction. The Transaction would allow the Company’s public shareholders to de-risk their investment and obtain immediate liquidity at a considerable premium.
We take very seriously the time, effort, and trust that all parties have invested to date in facilitating our due diligence of the Sporting Products business. These past efforts allow us to submit this letter with the intention to conduct expedited due diligence on the Outdoor Products segment only.
Acquisition Price
Subject to confirmatory due diligence, we are proposing a purchase price of
Financing
Our agreement would not be subject to any financing contingency. Our financial advisor stands ready to take you through the details of our financing.
Timing
MNC and its capital sources invested significant time and resources to complete due diligence of the Sporting Products segment in the Fall of 2023 alongside the work of its third-party advisors: FTI Consulting, Stax, Kirkland & Ellis, Marsh, Mercer, B Riley, Timberwolf Environmental and Stephens Inc. We have also now performed extensive outside-in diligence on the Outdoor Products business with all publicly available data and information and the support of several additional third-party advisors who we stand ready to introduce. We are prepared to devote substantial internal and external resources to move expeditiously towards the signing of a definitive agreement after finalizing our confirmatory diligence.
MNC’s interest in the Transaction, the existence of this letter, and its contacts are confidential, should not be disclosed without our prior written consent and should be treated in accordance with our existing confidentiality agreement. As is customary, the Proposal is not, and is not intended to be, a binding commitment or agreement. It also does not and is not intended to impose any legal or public disclosure obligations on any party but is merely a statement of MNC’s present desire to further discuss the Transaction with Vista’s board of directors.
We believe the proposed valuation and our ability to close produce both greater certainty and materially higher value than current alternatives being considered by the Company’s Board of Directors.
We are excited by the prospect of working expeditiously with the company and its advisors towards a transaction. Please feel free to contact Marshall McKissack at Stephens Inc. at mmckissack@stephens.com if you have any questions regarding the offer.
Sincerely,
Mark Gottfredson
MNC Capital
__________________
1 Share count assumes 58,146,933 common shares outstanding as of January 29, 2024 and 45,270 options outstanding, 242,904 performance-based awards nonvested and 741,023 restricted stock units nonvested as of March 31, 2023.
VISTA RESPONSE
February 26, 2024
Good Afternoon Mark,
The Board is currently reviewing the proposal consistent with its fiduciary duties, in consultation with our legal and financial advisors. We will revert to you promptly once the Board's review of your proposal is complete.
Best,
Mike
MNC FOLLOW UP LETTER
February 28, 2024
Members of the Board of Directors
C/O Mr. Michael
Vista Outdoor Inc.
1 Vista Way
STRICTLY PRIVATE AND CONFIDENTIAL
Dear Michael:
We are writing to follow up on our February 19, 2024 letter expressing our strong interest in acquiring Vista Outdoor Inc. (“Vista” or the “Company”). It has been over a week since we made our proposal, which included our readiness to have our advisors review the details of our funding with your advisors, and we look forward to a response from the Company. To re-iterate, our transaction provides a high degree of certainty to the Company, as it would not be subject to a financing condition and has no CFIUS risk. To further emphasize this, we continue to stand ready to provide you, under an appropriate NDA, with detailed information on our sources of funding. In summary, based on our prior proposal, we expect total uses to be approximately
We believe we have made a compelling proposal providing significantly higher value than the existing publicly announced sale of the Company’s Sporting Products division, The Kinetic Group, which already includes a control premium. Our offer represents a substantial premium to how the market is valuing, and will value, Revelyst - which lacks the scale to trade well as a standalone public company and will be better positioned to grow with private sponsorship. While we do not currently see a reason to increase our offer, if there is something missing from our valuation, we are open to hearing your perspectives.
We want to reiterate our support and respect for the management of both businesses. We strongly believe that the leadership team and employees at The Kinetic Group and Revelyst have been the key drivers of the Company’s success. At the appropriate time, we welcome the opportunity to discuss management’s plans and objectives for this next stage of growth at the Company. We strongly believe in the future of Revelyst and that its trajectory and development can be accelerated outside of public market constraints. Lastly, we are proud to represent a
MNC’s interest in the Transaction, the existence of this letter, and its contacts are confidential and should not be disclosed without our prior written consent. As is customary, the Proposal is not, and is not intended to be, a binding commitment or agreement. It also does not and is not intended to impose any legal or public disclosure obligations on any party but is merely a statement of MNC’s present desire to further discuss the Transaction with Vista’s board of directors.
We are excited to pursue this transaction and look forward to promptly having the opportunity to provide additional detail on our proposal. We respectfully request that by the end of the day tomorrow your advisors contact Marshall McKissack at Stephens Inc. at mmckissack@stephens.com to discuss next steps.
Sincerely,
Mark Gottfredson
MNC Capital
VISTA OUTDOOR RESPONSE
February 29, 2024
Good Afternoon Marshall,
We confirm that we are in receipt of MNC's letter dated February 28, 2024.
The Board is actively reviewing the proposal from the MNC letter dated February 19, 2024, including in consultation with our legal and financial advisors. We are very focused on our fiduciary duties and are carefully reviewing the proposal in compliance with such duties.
As you are aware, Vista Outdoor and its representatives are subject to the provisions set forth in Section 6.09 of the Merger Agreement between Vista Outdoor and Czechoslavak Group A.S.
We expect to be in a position to respond to MNC's proposal next week.
Best,
Mike
View source version on businesswire.com: https://www.businesswire.com/news/home/20240301559962/en/
Contact (For Press Inquiries Only):
Bob Christie
Brunswick Group
917-860-9410
On behalf of MNC Capital Partners, L.P.: https://mnccapitalpartners.com/
Source: MNC Capital Partners, L.P.
FAQ
What price per share did MNC Capital Partners propose to acquire Vista Outdoor, Inc. for?
What is the significance of keeping the Sporting Products business under U.S. ownership according to the proposal?
Why does MNC Capital Partners believe the next stage of Outdoor Products' growth is best pursued as a private company?
