ANOKA, Minn. - Vista Outdoor Inc . (NYSE: NYSE:VSTO), a leading global designer, manufacturer, and marketer of outdoor sports and recreation products, has turned down an unsolicited acquisition proposal from MNC Capital. The offer, made on February 19, 2024, suggested an all-cash transaction valued at $35.00 per share to acquire the company. However, after careful consideration with its financial and legal advisors, Vista Outdoor's Board of Directors has deemed the proposal inadequate and not in the best interest of its shareholders.
The board has expressed its continued support for the ongoing acquisition of its Sporting Products business by Czechoslovak Group a.s. (CSG) and is focused on the establishment of its Outdoor Products business, Revelyst, as a separate public entity.
The transaction with CSG is anticipated to conclude within the 2024 calendar year, pending stockholder approval, regulatory clearances, and other standard closing conditions. Vista Outdoor is actively engaging with the Committee on Foreign Investment in the United States (CFIUS) to secure the necessary approvals.
Michael Callahan, Chairman of Vista Outdoor's Board of Directors, stated that the proposal from MNC Capital significantly undervalues the company, especially the Revelyst business, which is projected to double its standalone adjusted EBITDA in FY25 and achieve a mid-teens adjusted EBITDA margin in the long term. Additionally, the offer lacked evidence of committed financing and was not deemed capable of successful completion.
The board's decision to reject MNC Capital's indication of interest was based on several factors, including the undervaluation of Vista Outdoor, the significant shareholder value expected from the separation of its Outdoor Products and Sporting Products segments, and the absence of committed financing from MNC Capital.
Vista Outdoor believes that the pending transaction with CSG and the independent operation of Revelyst will significantly enhance shareholder value.
Morgan Stanley & Co. LLC and Cravath, Swaine & Moore LLP are serving as financial and legal advisors, respectively, to Vista Outdoor. Moelis (NYSE:MC) & Company LLC and Gibson, Dunn & Crutcher LLP are advising the independent directors of the company.
This news is based on a press release statement from Vista Outdoor Inc.
InvestingPro Insights
As Vista Outdoor Inc. (NYSE: VSTO) navigates through acquisition proposals and strategic business maneuvers, real-time data from InvestingPro provides a clearer picture of the company's financial health and market performance. With a market capitalization of $1.93 billion and a notable adjusted P/E ratio of 10.53 for the last twelve months as of Q3 2024, the company's valuation reflects a balance between its earnings and share price. Despite recent challenges, InvestingPro Tips suggest that Vista Outdoor's shareholder yield is high, and net income is expected to grow this year. This aligns with the board's confidence in the company's value and future performance.
Adding to the company's appeal, analysts have revised their earnings upwards for the upcoming period, indicating a potential upside that may not have been fully recognized by MNC Capital's proposal. Furthermore, with a strong return over the last week of 10.25%, Vista Outdoor's stock performance has been robust, perhaps supporting the board's stance on the undervaluation of their shares. It's also worth noting that, according to InvestingPro, the company is trading near its 52-week high, with a price 97.85% of the peak, which may have influenced the board's rejection of the acquisition offer.
For investors looking to delve deeper into Vista Outdoor's financials and market prospects, InvestingPro offers additional insights, including more InvestingPro Tips that could further inform investment decisions. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and explore the full list of 13 additional tips available on the InvestingPro platform.
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