Vista Outdoor reported it received an all-cash $2 billion takeover offer for its ammunition business from an unnamed private U.S. investment firm. JDH Capital, the investment group run by Texas oil billionaire Jeffrey Hildebrand, is behind a new bid, sources told the Financial Times.
JDH Capital purchased Savage, a firearms manufacturer, from Vista in 2019 and April of this acquire Clarus’ Precision Sport segment, including Sierra Bullets and Barnes Bullets.
Separately, Vista rejected an improved proposal last week from investment group MNC Capital Partners to acquire the entire company for over $3 billion.
Both Monday’s offer and the MNC bid come as Vista’s Board has recommended selling the ammunition business, called The Kinetic Group, to Czechoslovak Group (CSG), a privately owned Czech defense group. Last October, Vista entered into a $1.91 billion deal to sell Kinetic, which includes the Federal, Remington, CCI, Hevi-Shot, and Speer ammunition brands, to CSG. In late May, Vista confirmed that CSG raised its offer to acquire Kinetic by $50 million to $1.96 billion.
Following the sale, Vista plans to list its outdoor products business, Revelyst, separately as a standalone company. Revelyst operates three segments: Adventure Sports (Fox Racing, Bell, Giro, CamelBak, QuietKat, and Blackburn); Outdoor Performance (Simms, Bushnell, Blackhawk, Stone Glacier, Camp Chef, and Primos) and Precision Sports and Technology (Foresight Sports, Bushnell Golf and Pinseeker).
In a statement Monday, Vista said the offer from the new bidder for Kinetic arrived on June 7, with the bid amounting to “$2,008,500,000 in cash, on a cash-free, debt-free basis.” Vista noted that the “alternative party” was involved in the prior sales process for Kinetic in 2023.
The new bidder said it would commit to fully supporting the purchase price and is prepared to execute definitive agreements by June 14.
Vista said, “The Board of Directors has determined the indication of interest from the alternative party would reasonably be expected to lead to a superior proposal and meets the standard for engagement under the terms of the CSG merger agreement.”
CSG would receive a $47.75 million break fee should its merger be terminated in favor of the new bidder’s offer.
Vista added, “The company remains bound by the terms of the merger agreement with CSG, and the Vista Outdoor Board continues to recommend the acquisition of The Kinetic Group by CSG. In addition, Vista Outdoor continues to be confident that it will receive clearance from the Committee on Foreign Investment in the United States (“CFIUS”) with respect to the proposed transaction with CSG and that all other closing conditions will be satisfied.”
Adjournment of Special Meeting of Stockholders
Vista said it now plans to adjourn a special meeting of shareholders to approve the CSG merger scheduled for June 14 until July 2 to explore the new bidder’s offer. The meeting had already been postponed from May 16 given the arrival of MNC’s offer.
Under CSG’s updated offer, the cash consideration to Vista Outdoor stockholders payable as part of the spinoff rose 24 percent, or $3.10 per share of Vista Outdoor common stock, from $12.90 to $16. Under the updated merger agreement with CSG, Vista Outdoor stockholders will now receive at the transaction’s closing one share of the common stock of Revelyst and $16 in cash per share of Vista Outdoor common stock.
The CSG transaction is expected to close in 2024, subject to approval of Vista Outdoor’s stockholders and receipt of clearance by the Committee on Foreign Investment in the United States.
Updated MNC Capital Offer Rejected
In a separate statement, Vista said it rejected an upgraded offer from MNC Capital to acquire the whole company following consultation with its financial and legal advisors. On June 6, MNC Capital raised its all-cash offer to acquire Vista to $39.50 a share, or over $3.0 billion.
The Texas-based company had initially offered $35 a share to acquire Vista on February 19 and raised its offer to $37.50 on March 25. In its statement Monday, Vista said it determined that the MNC’s latest offer would still not be more favorable to Vista stockholders than the transactions contemplated by the CSG merger agreement. The company rejected the $ 37.50 offer on May 28.
Vista’s Board issued a letter to MNC, reprinted below.
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June 10, 2024
MNC Capital
Attention: Mark Gottfredson
Mr. Gottfredson:
I am writing on behalf of Vista Outdoor Inc. (“Vista”) in response to MNC Capital’s (“MNC”) letter dated June 6, 2024, expressing MNC’s interest in pursuing a transaction pursuant to which MNC would acquire Vista in an all-cash transaction for $39.50 per Vista share (the “MNC Third Indication”). We also refer to the agreement and plan of merger dated as of October 15, 2023, as amended on May 27, 2024, between Vista, Revelyst, Inc., CSG Elevate II Inc., CSG Elevate III Inc., and, solely for the purposes of the Guarantor Provisions as defined therein, CZECHOSLOVAK GROUP a.s. (the “CSG Merger Agreement”).
Vista’s Board of Directors (the “Board”) has carefully reviewed the MNC Third Indication in consultation with our financial advisors and outside legal counsel.
After a thorough evaluation of the merits and risks of the MNC Third Indication, the Board has determined that the MNC Third Indication would not be more favorable to Vista stockholders from a financial point of view than, and would not reasonably be expected to be superior to, the transactions contemplated by the CSG Merger Agreement. The Board has therefore rejected the MNC Third Indication.
In light of the lack of compelling value in the MNC Third Indication, we continue to believe that our pending transaction with CSG will drive significantly greater value for our stockholders.
The Board takes its fiduciary responsibilities seriously and is deeply committed to maximizing value for all of our stockholders. The Board is always receptive to opportunities that will help us achieve that goal.
Regards,
Michael Callahan
Chairman of the Board of Directors of Vista Outdoor, Inc.
Image courtesy Vista Outdoor