Vista Outdoor Inc. (NYSE: VSTO) today announced that its Board
of Directors (the “Vista Outdoor Board”), following consultation
with its financial and legal advisors, has rejected an unsolicited
indication of interest received on February 19, 2024 from MNC
Capital (“MNC”) pursuant to which MNC expressed interest in
acquiring Vista Outdoor in an all-cash transaction for $35.00 per
Vista share (the “MNC Indication”). The Vista Outdoor Board also
issued a letter to MNC which is reproduced below.
The Vista Outdoor Board continues to recommend the acquisition
of the Sporting Products business by Czechoslovak Group a.s.
(“CSG”) and remains committed to the strategy of standing up the
Outdoor Products business (“Revelyst”) as a standalone public
company to drive the greatest value for our stockholders.
The acquisition of the Sporting Products business by CSG is
expected to close in calendar year 2024, subject to approval of
Vista Outdoor’s stockholders, receipt of necessary regulatory
approvals and other customary closing conditions. We have been
actively engaged with the Committee on Foreign Investment in the
United States (“CFIUS”) and our team is working with CFIUS to
obtain its clearance. As previously stated, we remain confident in
our ability to receive all necessary regulatory approvals,
including with respect to CFIUS, and to satisfy all closing
conditions.
Michael Callahan, Chairman of the Board of Directors, said
“Following careful review with our experienced team of financial
and legal advisors, the Board determined that the transaction
contemplated by MNC Capital’s indication of interest significantly
undervalues the Company and is not in the best interest of our
stockholders. In particular, the indication of interest
significantly undervalues the Revelyst business, which we expect to
double standalone adjusted EBITDA in FY25 and achieve mid-teens
adjusted EBITDA margin in the long term.1 The indication also lacks
evidence of procured committed financing and is not reasonably
capable of being completed. We take our fiduciary responsibilities
seriously and are always open to opportunities that maximize
stockholder value.
“We continue to firmly believe that our pending transaction with
CSG and the separation of Revelyst as a standalone public company
will drive significantly greater value for our stockholders. CSG is
fully committed to Sporting Products’ iconic American brands and
expanding our legacy of U.S. manufacturing, support for military
and law enforcement customers, and investments in conservation and
our hunting and shooting heritage. At the same time, Revelyst is
poised to leverage meticulous craftsmanship and cross-collaboration
across its portfolio of category-defining brands as a standalone
public company. We are confident that this is the best path to
unlock value for our stockholders.”
The full text of the letter to MNC follows:
March 4, 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”) letters dated February 19, 2024
and February 28, 2024, expressing MNC’s interest in pursuing a
transaction pursuant to which MNC would acquire Vista in an
all-cash transaction for $35.00 per Vista share (the “MNC
Indication”). We also refer to the agreement and plan of merger
dated as of October 15, 2023, 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 Indication in consultation with our financial advisors and
outside legal counsel.
After a thorough evaluation of the merits and risks of the MNC
Indication, the Board has determined that the MNC Indication would
not be more favorable to Vista stockholders from a financial point
of view than the transactions contemplated by the CSG Merger
Agreement, is not reasonably capable of being completed and does
not constitute a basis for engagement with MNC. The Board has
therefore rejected the MNC Indication.
This determination by the Board was based on a number of
factors, including that:
- the consideration of $35.00 in cash per Vista share in the MNC
Indication significantly undervalues Vista;
- the MNC Indication does not take into account the significant
stockholder value that is expected to be created by the separation
of the Outdoor Products and Sporting Products segments of Vista
into two independent companies, each with its own dedicated
strategic focus, enhanced ability to attract and retain top talent,
tailored capital allocation philosophy, and set of competitive
advantages;
- the MNC Indication provides no evidence whatsoever that MNC has
procured committed financing. This is particularly concerning in
light of MNC’s repeated failure to deliver executed debt commitment
letters with respect to the debt financing contemplated by the
proposals it made in September and October 2023 to acquire Vista’s
Sporting Products business;
- the MNC Indication notes that it is subject to further
diligence by MNC and its advisors without any indication of
specific diligence requests or the anticipated timeframe for
completing such diligence;
- the MNC Indication does not provide adequate detail with
respect to the proposed transaction, including, among other things,
with respect to contractual terms.
In light of these concerns, as well as the lack of compelling
value in the MNC 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.
Vista Outdoor stockholders do not need to take any action at
this time.
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.
Non-GAAP Financial Measures
Non-GAAP financial measures such as adjusted EBITDA and adjusted
EBITDA margin as included in this press release are supplemental
measures that are not calculated in accordance with Generally
Accepted Accounting Principles (“GAAP”). These non-GAAP measures
should be considered in addition to, and not as substitutes for,
GAAP measures. Please see the tables below for reconciliations of
these non-GAAP measures to the most directly comparable GAAP
measures.
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA is defined as net income before other
income/(expense), interest, taxes, and depreciation and
amortization, excluding the nonrecurring and non-cash items
referenced above. We calculate “Adjusted EBITDA margins” as
Adjusted EBITDA divided by net sales. Vista Outdoor management
believes adjusted EBITDA and adjusted EBITDA margin provide
investors with an important perspective on the Company’s core
profitability and help investors analyze underlying trends in the
Company’s business and evaluate its performance on an absolute
basis and relative to its peers. Adjusted EBITDA and adjusted
EBITDA margin should be considered in addition to, and not as a
substitute for, GAAP net income and GAAP net income margin. Vista
Outdoor’s definitions may differ from those used by other
companies.
Forward-Looking Statements
Some of the statements made and information contained in these
materials, excluding historical information, are “forward-looking
statements,” including those that discuss, among other things: 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., 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, its ability to maintain relationships with its
customers, vendors, service providers and others with whom it does
business, or its 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 2023, in
Part II, Item 1A, Risk Factors, of our Quarterly Report on Form
10-Q for the third quarter of fiscal year 2024, and in the filings
we make with Securities and Exchange Commission (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 proposed 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 on
January 16, 2024 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. After the
Registration Statement is declared effective, we will mail 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 will be 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 its 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.
1 Vista Outdoor has not reconciled adjusted EBITDA guidance and
adjusted EBITDA margin guidance (on a segment or consolidated
basis) to GAAP net income guidance and GAAP net income margin
guidance, respectively, because Vista Outdoor does not provide
guidance for net income, which is the most directly comparable
financial measure calculated in accordance with GAAP with respect
to adjusted EBITDA and a reconciling item between GAAP net income
margin and non-GAAP EBITDA margin. Accordingly, reconciliations to
net income and net income margin are not available without
unreasonable effort. See the section titled ‘Non-GAAP Financial
Measures’ for more information.
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version on businesswire.com: https://www.businesswire.com/news/home/20240304293100/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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