CSG Transaction Provides Compelling Value for
Stockholders and Certainty to Close
MNC Final Indication of Interest Fundamentally
Undervalues the Company and Has Significant Execution Risk
Urges Stockholders to Vote “FOR” the CSG
Transaction at Upcoming Special Meeting of Vista Outdoor
Stockholders
Vista Outdoor Inc.’s (“Vista Outdoor” or “the Company”) (NYSE:
VSTO) Board of Directors today issued an open letter to Vista
Outdoor stockholders in connection with its upcoming Special
Meeting of Stockholders (the “Special Meeting”) on July 23, 2024.
The full text of the letter is as follows:
Dear Vista Outdoor Stockholders,
As members of Vista Outdoor’s Board of
Directors and fellow stockholders, we are writing to you about an
important decision you will be making at our July 23, 2024 Special
Meeting. Our Board has been – and will continue to be – steadfast
and singularly focused on maximizing value for Vista Outdoor’s
stockholders.
As the upcoming Special Meeting is fast
approaching, we believe you all deserve to have a clear
understanding of the robust process we underwent to extract
tremendous value for The Kinetic Group on behalf of our
stockholders and why we are confident this is the best choice for
our stockholders by locking in the $2.1 billion dollar value of The
Kinetic Group and providing our stockholders the opportunity to
participate in Revelyst’s projected growth and margin
expansion.
BOARD ENGAGED IN THOROUGH
COMPETITIVE PROCESS TO MAXIMIZE STOCKHOLDER VALUE
As you know, we announced the separation of
our Outdoor Products and Sporting Products segments in May 2022 in
order to optimize both businesses. That resulted in a thorough
process that commenced in September 2022 to review several
alternatives for unlocking stockholder value. We engaged with 26
counterparties, including 14 strategics and 12 sponsors, that were
each given fair and full consideration. As part of this process,
Vista Outdoor engaged extensively with MNC Capital (“MNC”),
including providing MNC access to approximately 4,900 documents,
answering over 1,050 data requests, holding over 35 meetings or
calls, giving extensive access to the management team and
supporting multiple site tours.
Following this competitive and thorough
process and in consultation with our leading financial and legal
advisors, we ultimately concluded the sale of The Kinetic Group to
Czechoslovak Group a.s. (“CSG”) (the “CSG Transaction”) and the
separation of Revelyst as a standalone public company is the best
path to unlock value for our stockholders. We stand by our
recommendation to vote “FOR” the CSG Transaction at the upcoming
Special Meeting.
A VOTE “FOR” CSG TRANSACTION WILL
DELIVER COMPELLING VALUE FOR STOCKHOLDERS AND CERTAINTY TO
CLOSE
On July 8, 2024, we entered into an amendment
to the merger agreement with CSG, which increased the purchase
price for the acquisition of The Kinetic Group to $2.1 billion (an
increase of $190 million since CSG’s original purchase price) and
increased the cash consideration to $21.00 per share of Vista
Outdoor common stock (an increase of $8.10 per share since the
original cash consideration). As a result of the CSG Transaction,
stockholders will receive one share of Revelyst common stock and
$21.00 in cash, in each case, per share of Vista Outdoor common
stock.
A vote “FOR” the CSG Transaction is a vote
for:
- Maximizing the value of The Kinetic Group business,
which was the objective the Board set out to achieve all along
since we announced the plan to separate the businesses in May 2022.
CSG’s $2.1 billion purchase price represents a robust value for the
Kinetic Group, resulting from a thorough and competitive
process.
- Enabling stockholders to participate in standalone
Revelyst. As a result of the CSG Transaction, Vista Outdoor
stockholders will become stockholders of Revelyst and have the
ability to participate in the projected growth of Revelyst. The
Company reaffirmed its annual guidance to double standalone
Revelyst EBITDA in fiscal year 2025 with a clear path to achieve
more than $100 million in run-rate cost saving by fiscal year 2027
and mid-teens EBITDA margins long-term. As a pure-play standalone
outdoor company, there is significant opportunity for Revelyst to
realize superior value for stockholders when separated from The
Kinetic Group, with expanded strategic opportunities and the
strengthened ability to attract and retain talent.
- Deal certainty and ability to close in July. Vista
Outdoor and CSG have received all regulatory approvals required
under the merger agreement and are prepared to close in July 2024,
subject to receipt of stockholder approval and satisfaction of
other customary closing conditions.
- The Board is open minded and committed to maximizing value
of Revelyst, just as we demonstrated with our ability to
maximize value for The Kinetic Group. A standalone Revelyst will
benefit from being able to attract its natural owners, and as a
result of the CSG Transaction, stockholders retain the ability to
realize a potential change of control premium for Revelyst in the
future. We are always open to opportunities to maximize stockholder
value and may consider pursuing a range of strategic alternatives
for Revelyst at the appropriate time and at the appropriate
valuation. The Board believes that, if it were strategically
beneficial to sell Revelyst, the Board would engage in a thorough
and competitive process to do so in order to maximize value for
stockholders, just like the Board has done with respect to The
Kinetic Group.
Vista Outdoor’s financial advisors each
delivered an opinion as to the fairness, from a financial point of
view, of the consideration in the CSG Transaction to the
stockholders of Vista Outdoor’s common stock. We are confident the
CSG Transaction is the most compelling for stockholders.
A VOTE AGAINST THE CSG
TRANSACTION DOES NOT MEAN WE WILL NEGOTIATE WITH MNC
CAPITAL
The Board thoroughly reviewed and evaluated
MNC’s final indication of interest to acquire Vista Outdoor in an
all-cash transaction for $42.00 per share (the “MNC Final
Indication”). Following consultation with its financial and legal
advisors, the Board unanimously rejected MNC’s best and final
indication of interest, which:
- Is inadequate and fundamentally undervalues Vista Outdoor,
especially the Revelyst business. The MNC Final Indication is
opportunistic and seeks to capture Revelyst’s value at a discount
outside of a sale process. It does not take into account the
significant projected EBITDA expansion at Revelyst under new
management or the ability for Vista Outdoor stockholders to realize
a potential change of control premium for Revelyst in the future.
The CSG Transaction delivers $7-$16 per share more value to
stockholders than the MNC Final Indication.
- Involves significant execution risk and would take several
months to close. MNC’s Final Indication still remains subject
to additional due diligence, despite having engaged with MNC for
six weeks in May and June 2024 (in addition to the extensive
engagement prior to signing the CSG merger agreement).
Additionally, its financing includes new debt and equity partners
relative to their prior offer, none of which have been publicly
disclosed to the stockholders, as would be customary in similar
transactions. In addition, you should know that MNC has never
completed a transaction.
- There is no guarantee that MNC will maintain its $42 per
share offer - especially in the absence of competition if
stockholders vote against the CSG Transaction. MNC has stood
in the way of other competition throughout this process.
- The Board determined there is no basis to engage with
MNC regarding its final indication of interest given MNC indicated
that it “cannot see any possible basis or reason to further raise
[its proposal].”
- Importantly, voting against the CSG Transaction at the
Special Meeting does NOT mean the Board will decide to negotiate or
resume discussions with MNC for the reasons stated above. If
the CSG Transaction is not approved at the Special Meeting, the
Board will need to consider all strategic alternatives available to
Vista Outdoor at that time, in accordance with our fiduciary
duties.
Each of Vista Outdoor’s financial advisors
has delivered an opinion that the MNC Final Indication is
inadequate, from a financial point of view, to the holders of Vista
Outdoor’s common stock.
At Vista Outdoor’s upcoming Special Meeting
on July 23, 2024, you will be asked to make an important decision
regarding the future of your investment. The Board of Directors
unanimously recommends that you vote “FOR” the CSG
Transaction. We firmly believe this transaction provides
compelling value and is in the best interest of all Vista Outdoor
stockholders.
Sincerely,
Vista Outdoor Inc.’s Board of Directors
By Michael Callahan, Chairman of the Board of
Directors
The special meeting of Vista Outdoor stockholders to, among
other things, vote on a proposal to adopt the merger agreement with
CSG, is scheduled to be held virtually on July 23, 2024, at 9:00
a.m. Central Time. Additional information can be found in Vista
Outdoor’s proxy statement/prospectus and the supplements thereto
filed with the U.S. Securities and Exchange Commission (the “SEC”),
including the most recent supplement to the proxy
statement/prospectus dated June 8, 2024.
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/20240710955086/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
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