By Anirban Sen and Abigail Summerville
NEW YORK (Reuters) – Vista Outdoor (NYSE:) has agreed to divest itself in segments to two different buyers for a total of $3.35 billion, including debt, following a prolonged battle against a hostile suitor that had been pursuing the sporting goods and ammunitions manufacturer for months.
Vista has reached an agreement to sell its sporting goods division Revelyst to investment firm Strategic Value Partners for $1.1 billion, as per a statement seen by Reuters.
Additionally, it has restructured the terms of a previously agreed deal to sell its ammunitions business Kinetic to Prague-based defense contractor Czechoslovak Group (CSG).
CSG has increased its offer for Kinetic by $75 million to $2.2 billion. The company, which had initially also agreed to purchase a 7.5% stake in Revelyst for $150 million, has decided against doing so.
Collectively, the two transactions value Vista at $45 per share, surpassing a competing $43 per share bid from MNC Capital, an investment firm led by former Vista board member Mark Gottfredson. MNC had made multiple attempts to acquire Vista earlier in the year.
“The board has worked diligently to deliver maximum value to its shareholders, and we are pleased to have reached this agreement with SVP and CSG which helps us achieve that objective,” stated Michael Callahan, chairman of Vista’s board of directors.
The deal has received approval from Vista’s board of directors. The sale of Revelyst is anticipated to close by January, subject to regulatory approvals and the finalization of the CSG agreement.
This intricate transaction would necessitate a vote by Vista’s shareholders.
Vista’s earlier deal with CSG had received mixed recommendations from proxy advisory firms. Glass Lewis recommended that Vista shareholders approve the proposed merger of the ammunition unit with CSG, while Institutional Shareholder Services recommended voting against the deal.
Minnesota-based Vista is the parent company of Federal Ammunition and Remington Ammunition brands, with its outdoor product brands including Foresight Sports, CamelBak, Bushnell Golf, and Simms Fishing.
The prolonged saga between Vista and MNC unfolded against the backdrop of heightened demand for military supplies since the escalation of the Russia-Ukraine conflict in 2022.
“With this investment, we plan to leverage SVP’s full operational resources and network to support Revelyst’s market leadership,” stated David Geenberg, head of SVP’s North America corporate investment team.
BACK AND FORTH
The bidding war for Vista commenced earlier this year, with Vista rejecting numerous offers from MNC and endorsing CSG’s bid for Kinetic. In June, the CSG deal received clearance from the Committee on Foreign Investment in the United States, which scrutinizes foreign investments for potential national security implications. Colleyville, Texas-based MNC contended that a deal with CSG would pose a national security risk.
In July, Vista initiated a strategic review to explore all options after failing to garner investor support for the CSG deal. The company had to postpone a shareholder vote to approve the CSG deal multiple times in recent months in a bid to fend off MNC’s persistent advances.
In September, MNC submitted a revised offer worth $3.2 billion, including debt, and indicated that it would collaborate with an undisclosed private equity firm to own the Revelyst business and help finance its bid. Subsequently, Vista separately engaged with the private equity firm, reportedly Strategic Value Partners, for a deal involving the sporting goods business.
Vista Outdoor’s shares, which have climbed approximately 35% since the beginning of the year, concluded at $39.84 on Friday, bestowing the company with a market value of around $2.33 billion.
SVP, founded by investor Victor Khosla in 2001, manages approximately $19 billion in assets.
Morgan Stanley provided counsel to Vista on the transaction, while Moelis advised the company’s board. Goldman Sachs advised SVP, while JPMorgan advised CSG.