Vista Outdoor Board Announces Review of Strategic Alternatives

Rhea-AI Summary

Vista Outdoor Inc. (NYSE: VSTO) has announced a strategic review, exploring various alternatives for its business. The Board is considering: 1) Potential sale of Revelyst, with CSG exploring acquisition options. 2) Engaging with MNC Capital to explore a superior offer for the entire company. 3) Continued consideration of separating Revelyst and The Kinetic Group through a spin-off.

In light of these developments, Vista Outdoor has adjourned its special stockholders meeting to September 13, 2024. The Board remains committed to maximizing stockholder value and continues to recommend voting in favor of the CSG merger agreement. Morgan Stanley and Cravath, Swaine & Moore LLP are advising Vista Outdoor, while Moelis & Company and Gibson, Dunn & Crutcher LLP are advising the independent directors.

Positive

• Board's proactive approach in exploring multiple strategic alternatives to maximize shareholder value
• Potential for a higher acquisition offer from MNC Capital
• Flexibility in considering various options including sale, spin-off, or merger

Negative

• Uncertainty surrounding the company's future direction
• Delay in the special stockholders meeting, potentially prolonging decision-making process
• Possible complications in existing merger agreement with CSG due to exploration of other options

Insights

Financial Analyst

Vista Outdoor's announcement of a strategic review is a significant development that could reshape the company's future. The board's decision to explore multiple options, including potential sales and acquisitions, signals a proactive approach to maximizing shareholder value.

Key points to consider:

• The potential sale of Revelyst could unlock hidden value, especially if it attracts competitive bids.
• CSG's interest in acquiring Revelyst, in addition to The Kinetic Group, suggests a broader strategic vision that could benefit Vista Outdoor shareholders.
• MNC Capital's willingness to potentially increase its offer price is a positive sign for shareholders, as it could lead to a bidding war and drive up the company's valuation.
• The consideration of a spin-off for Revelyst and The Kinetic Group remains on the table, offering an alternative path to unlock value.

The adjournment of the special meeting to September 13, 2024, provides ample time for these alternatives to be thoroughly evaluated. This strategic review could lead to significant changes in Vista Outdoor's structure and valuation, making it a important period for investors to monitor closely.

While the board still recommends voting in favor of the CSG merger agreement, the exploration of alternatives suggests they are open to more lucrative opportunities. Investors should pay close attention to any updates or announcements in the coming weeks, as these could have substantial impacts on the stock's performance and the company's future direction.

Corporate Strategy Expert

Vista Outdoor's strategic review is a textbook example of a board fulfilling its fiduciary duty to maximize shareholder value. This move demonstrates the company's adaptability in a dynamic market environment and willingness to consider all options on the table.

The multi-pronged approach is particularly noteworthy:

• Exploring the sale of Revelyst could streamline operations and focus on core competencies.
• Engaging with MNC Capital shows openness to competitive offers, potentially driving up the acquisition price.
• Keeping the spin-off option alive provides a fallback strategy if other alternatives don't pan out.

The board's decision to adjourn the special meeting is a shrewd move, allowing time for a thorough evaluation of all options without rushing into a potentially suboptimal deal. This patience could pay dividends in the form of a more favorable transaction for shareholders.

However, investors should be aware that prolonged uncertainty could lead to short-term stock price volatility. The ultimate outcome of this review could range from a complete sale of the company to a major restructuring, each with its own set of risks and potential rewards.

The involvement of multiple financial and legal advisors underscores the complexity of the situation and the board's commitment to a thorough process. As the September 13 meeting approaches, expect increased market speculation and potentially more suitors entering the fray, which could further complicate - but potentially enhance - the outcome for shareholders.

Company Adjourns Special Meeting for CSG Transaction to September 13, 2024

ANOKA, Minn.--(BUSINESS WIRE)-- Vista Outdoor Inc. (“Vista Outdoor” or “the Company”) (NYSE: VSTO) today announced that its Board of Directors (the “Board”) has commenced a review of strategic alternatives, which includes:

• Exploration of a full range of alternatives for Revelyst, including a potential sale of Revelyst. The Czechoslovak Group a.s. (“CSG”) is also considering an acquisition of Revelyst with potential partners (in addition to its proposed acquisition of The Kinetic Group).
• Engagement with MNC Capital (“MNC”) and its private equity partner with respect to its proposal to acquire Vista Outdoor to see if it can deliver superior value for the Company’s stockholders. This follows MNC’s recent public statement on July 26, 2024 that “if there were a reason or basis to increase our offer, including Vista engaging with us and providing one, we would increase our offer price”. In light of this recent statement, the Board has determined that MNC’s proposal would reasonably be expected to lead to a superior proposal and meets the standard for engagement under the terms of the CSG merger agreement. Considering the extensive diligence conducted by MNC and its private equity partner to date, Vista Outdoor expects MNC to be able to confirm an increased proposal for the acquisition of Vista Outdoor in short order.
• Continued consideration of the separation of Revelyst and The Kinetic Group through a spin-off.

The Board remains committed to acting in the best interests of the Company and its stockholders.

“We recognize the continuing support received from many of our stockholders for the CSG transaction and the feedback from some of our stockholders with respect to other strategic alternatives,” said Mike Callahan, Chairman of the Board of Directors. “We take the views of our stockholders very seriously and believe it is prudent to evaluate all strategic alternatives. In addition to engaging with CSG and MNC and its private equity partner, we also look forward to reviewing any other strategic alternative for Vista Outdoor that would maximize value for stockholders. While we conduct this strategic review, we remain as focused as ever on delivering high-quality, innovative products for our consumers around the world.”

In light of this announcement, Vista Outdoor will adjourn the special meeting of stockholders (the “Special Meeting”) scheduled to be held at 9:00 am (Central Time) on July 30, 2024, to 9:00 am (Central Time) on September 13, 2024. The Board continues to recommend Vista Outdoor stockholders vote in favor of the proposal to adopt the merger agreement with CSG at the Special Meeting.

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.

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: Vista Outdoor Inc.’s (“Vista Outdoor”, “we”, “us” or “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. (“Revelyst”), 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, our ability to maintain relationships with our customers, vendors, service providers and others with whom we do business, or our 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 2024, and in the filings we make with 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 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 our 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/20240730135795/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

Source: Vista Outdoor Inc.

FAQ

What strategic alternatives is Vista Outdoor (VSTO) considering?

Vista Outdoor (VSTO) is considering: 1) Potential sale of Revelyst, 2) Engaging with MNC Capital for a possible superior offer to acquire the entire company, and 3) Continued consideration of separating Revelyst and The Kinetic Group through a spin-off.

When is the adjourned special stockholders meeting for Vista Outdoor (VSTO) scheduled?

The adjourned special stockholders meeting for Vista Outdoor (VSTO) is rescheduled for September 13, 2024, at 9:00 am Central Time.

Who are the financial and legal advisors for Vista Outdoor (VSTO) in this strategic review?

Morgan Stanley & Co. is the financial advisor and Cravath, Swaine & Moore LLP is the legal advisor for Vista Outdoor (VSTO). For the independent directors, Moelis & Company is the financial advisor and Gibson, Dunn & Crutcher LLP is the legal advisor.

What is the Board's recommendation regarding the CSG merger agreement for Vista Outdoor (VSTO)?

The Board of Vista Outdoor (VSTO) continues to recommend that stockholders vote in favor of the proposal to adopt the merger agreement with CSG at the Special Meeting.