DALLAS, Texas--(BUSINESS WIRE)--MNC Capital Partners, L.P. (“MNC”) today announced that on February 19, 2024, it submitted a proposal to acquire Vista Outdoor, Inc. (NYSE: VSTO) (“Vista”) for $35.00 per share at which point Vista’s closing share price was below $30.00 per share.
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 Callahan
Vista Outdoor Inc.
1 Vista Way
Anoka, MN 55303
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 $35.00 in cash (the “Transaction”). This proposed transaction is materially superior to the October 16, 2023 publicly announced sale of the Company’s Sporting Products division, The Kinetic Group, to CZECHOSLOVAK GROUP a.s., and the separation of the Company’s Outdoor Products division, Revelyst, Inc., into a public company. The Transaction would allow the Sporting Products business and its critical national security assets to remain under U.S. ownership and would create value certainty and enhanced sponsorship for the Outdoor Products business. The proposed price offers a substantial premium to Vista’s share price, which already reflects a takeover premium. Given Vista’s share price is currently trading close to its 52-week high, our proposal also reflects a highly attractive value overall to Vista’s shareholders.
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, given U.S. ammunition shortages and increasing demand from U.S. and NATO allies abroad. This transaction would allow the business to stay American-owned with a long-term U.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 former United 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 $35.00 a share. Our valuation assumes total fully diluted shares of the Company as disclosed in its most recent public filings. 1
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 Callahan
Vista Outdoor Inc.
1 Vista Way
Anoka, MN 55303
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 $2.9 billion and are planning to fund the transaction with approximately $1.5 billion of equity and $1.4 billion of debt financing (with specifics available under that NDA).
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 U.S. ownership alternative for The Kinetic Group, which is a national security asset (and given its primer manufacturing capabilities, is arguably an asset to America’s greater global allies as well). Our proposal would enable The Kinetic Group to stay American-owned with long-term U.S. shareholders aligned with the interests of America’s national security, consumers, and international allies. To reiterate, our proposal also poses no CFIUS risk.
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 Callahan