CSG Ups Merger Offer to $2.15 Billion for Vista Outdoor’s Ammo Division
News|Industry News
By Drew Bryant
July 28th, 2024, theloadoutblog.com
On Monday, CSG offered to increase the purchase price and amend the merger price to $2.15 billion for the sale of Vista Outdoor’s ammunition business. This business includes names such as Federal, Speer, and Remington. This amended merger proposal follows a previous offer that added $50 million, changing the offer from $1.61 billion to $1.91 billion. Now, CSG has added another $50 million to the offer to up the ante for Vista Outdoor’s board.
In the new amendment, the base purchase price payable by CSG for the acquisition of Vista Outdoor’s ammunition companies increased by $50 million to $2.15 billion. This increase raises the cash considerations payable to stockholders by $3.00 per share to $24 per share of Vista Outdoor common stock. Previously, shareholders were receiving $16 per share. Based on the amended merger agreement, Vista Outdoor stockholders will receive one share of common stock in Revelyst and $24 in cash for every share of Vista Outdoor common stock at the finalization of the agreement.
Below is the press release detailing the amended merger between Vista Outdoor and CSG.
Press Release
News Details
Vista Outdoor Announces Increased Purchase Price from CSG for The Kinetic Group of $2.15 Billion and Increased Cash Consideration of $24.00 Per Share
07/22/2024
Vista Outdoor Reaffirms Fiscal Year 2025 Outlook; Reports Preliminary Q1 FY2025 Results
Revelyst Expected to Pursue 12-Month $50 Million Share Repurchase Program; Strategically Positioned to Unlock Meaningful Growth and Margin Expansion
Special Meeting of Stockholders to be Adjourned to July 30, 2024
Company to Host Earnings Conference Call on Tuesday, August 6, 2024, at 9 a.m. ET to Review Full Quarterly Results, Outlook, and Strategy
ANOKA, Minn.–(BUSINESS WIRE)–Vista Outdoor Inc. (NYSE: VSTO) (“Vista Outdoor”, “we” or the “Company”) today announced that on July 21, 2024, the Company entered into an amendment to the merger agreement with Czechoslovak Group a.s. (“CSG”). In addition, the Company reaffirmed its Fiscal Year 2025 outlook and reported preliminary, unaudited Q1 Fiscal Year 2025 results.
CSG Increases Purchase Price for The Kinetic Group
The amended merger agreement with CSG further increases the base purchase price payable by CSG for the acquisition of The Kinetic Group business (the “CSG Transaction”) by $50 million to $2.15 billion.
In addition, Vista Outdoor has determined that an additional ~$125 million of cash should be returned to Vista Outdoor’s stockholders as cash consideration. This follows a careful review of Revelyst’s capital allocation strategy, contemplated divestitures, and the availability of the ABL facility, and the determination that capitalizing Revelyst with cash and cash equivalents of ~$125 million is sufficient to execute the Revelyst business plan.
In total, the increase in the base purchase price payable by CSG combined with the additional cash being returned to stockholders by Vista Outdoor increases the cash consideration payable to Vista Outdoor stockholders in the CSG Transaction by $3.00 per share to $24.00 in cash per share of Vista Outdoor common stock. Based on the amended merger agreement with CSG, Vista Outdoor stockholders will receive at the closing of the CSG Transaction, $24.00 per share in cash and one share of Revelyst common stock, in each case, per share of Vista Outdoor common stock.
Vista Outdoor is confident that the CSG Transaction maximizes value for its stockholders by providing for a $2.15 billion purchase price, representing a $240 million increase from the original $1.91 billion purchase price, and cash consideration of $24.00 per share of Vista Outdoor common stock, close to double the cash consideration per share from the original cash consideration of $12.90 per share of Vista Outdoor common stock, and a share of Revelyst stock. Vista Outdoor firmly believes this increased offer is superior to MNC Capital’s proposal of $42.00 per share as the CSG Transaction allows stockholders to lock in the $2.15 billion purchase price for The Kinetic Group and benefit from both the expected increase in multiple from the separation of Revelyst into a standalone company as well as participate in the significant EBITDA expansion through growth in the Revelyst business and $100 million of cost savings from the GEAR Up program over the next three years.
Rather than looking at MNC Capital’s proposal in isolation, we urge stockholders to take into account the significant increase in value since the CSG merger agreement was first signed in October 2023, which is comprised of (i) the meaningful increase in CSG’s purchase price of $240 million ($4.05 per share) for The Kinetic Group, and (ii) Vista Outdoor’s additional cash generation of $190 million ($3.20 per share) during this time that is directly being returned to stockholders as cash consideration in the CSG Transaction.
In summary, the CSG Transaction delivers $430 million (~$7.25 per share) in additional value to Vista Outdoor stockholders since CSG’s original offer and enables stockholders to receive 100% of the cash that the Company has generated in the interim period plus retain the upside in Revelyst. Voting “FOR” the CSG Transaction allows stockholders to crystallize this value increase, as opposed to MNC Capital using Vista Outdoor’s own cash to finance its fixed price per share proposal.
“We are pleased that CSG has increased its purchase price for The Kinetic Group, underscoring their continued commitment to the transaction and the underlying value they see in our business,” said Michael Callahan, Chairman of the Board of Directors. “We are confident the transaction with CSG maximizes value for our stockholders and provides stockholders the opportunity to realize superior value in Revelyst when separated from The Kinetic Group. We urge stockholders to vote for the CSG Transaction, which delivers clear, compelling value and the ability to close in early August.”
Special Meeting of Stockholders to be Adjourned
The Vista Outdoor Board of Directors also announced it will adjourn the special meeting of stockholders scheduled to be held virtually on July 23, 2024, at 9:00 am (Central Time) to July 30, 2024, at 9:00 am (Central Time) to enable the Company to engage with stockholders prior to the vote in light of recent developments.
Reaffirms Outlook for Fiscal Year 2025
The Company reaffirms its guidance for Fiscal Year 2025 for Vista Outdoor, as well as The Kinetic Group and Revelyst. The Company expects the following results for Fiscal Year 2025, among other guidance previously disclosed:
• Sales in the range of $2.665 billion to $2.775 billion
• The Kinetic Group Sales expected to be approximately $1.425 billion to $1.475 billion
• Revelyst Sales expected to be approximately $1.240 billion to $1.300 billion
• Adjusted EBITDA in the range of $410 million to $490 million
• The Kinetic Group adjusted EBITDA expected to be approximately $350 million to $400 million
• Revelyst adjusted EBITDA expected to be approximately $130 million to $160 million
Vista Outdoor expects that Revelyst will pursue a 12-month $50 million share repurchase program following the closing of the CSG Transaction, subject to approval by the Revelyst Board of Directors.
“Our balance sheet remains strong, with our net debt decreasing by $81 million during the quarter to $579 million,” said Andrew Keegan, CFO of Vista Outdoor. “At Revelyst, we have been sharply focused on reducing inventory levels, and I am pleased with the progress our team has made, which has resulted in an approximately $100 million inventory reduction from the year prior and nearly $10 million sequentially from the prior quarter. These efforts continue to drive down our debt levels and contribute to maintaining our healthy balance sheet. At The Kinetic Group, the team remains steadfast on achieving our financial expectations while continuing to face competitive pricing and input cost headwinds, especially for copper and powder.”
“Looking forward, we expect to see increased sales and EBITDA momentum in the quarters ahead at Revelyst, as a result of new and exciting product launches, cross collaborations, and improvements in our channel strategy. We have also seen tremendous progress with our GEAR Up transformation program, which contributed $5 million in realized cost savings in Q1 FY2025, providing a clear path to $25-$30 million of cost savings in FY2025. This progress gives us confidence in our expectation to double Revelyst standalone adjusted EBITDA during the year.” Mr. Keegan concluded.
