Vista Outdoor announces sale of Revelyst and strategic acquisition of The Kinetic Group: A Transformative deal for $3.35 Billion
Vista Outdoor Inc. (NYSE: VSTO) has made significant strides towards reshaping its business structure, entering into a definitive agreement with Strategic Value Partners, LLC (SVP) for the sale of its subsidiary, Revelyst. The transaction, valued at $1.125 billion, forms part of a broader strategic move by Vista Outdoor that includes an amended merger agreement with the Czechoslovak Group (CSG) to acquire The Kinetic Group for $2.225 billion. Together, these two deals represent a combined enterprise value of $3.35 billion for Vista Outdoor and promise to deliver substantial returns for its shareholders.
Strategic transactions overview
The arrangement between Vista Outdoor and SVP involves the sale of Revelyst, an outdoor industry leader with a diverse portfolio of brands, to SVP in an all-cash transaction. This deal follows the increase of the purchase price for The Kinetic Group by CSG, which now stands at $2.225 billion. Both agreements, collectively termed the "CSG Transaction" and "SVP Transaction," are interdependent, with the completion of the SVP deal hinging on the successful close of the CSG Transaction.
The combined outcome of these transactions is expected to result in an estimated cash distribution of $45 per share for Vista Outdoor stockholders, split between $25.75 per share from the CSG Transaction and $19.25 per share from the subsequent sale of Revelyst to SVP. This move is part of Vista Outdoor's broader plan to maximize shareholder value and focus on its core strengths.
Statements from leadership
Michael Callahan, Chairman of the Vista Outdoor Board of Directors, highlighted the company's commitment to delivering value to shareholders through these transactions. "The Board has worked tirelessly to deliver maximum value to its stockholders, and we are pleased to have reached this agreement with SVP and CSG, which helps us achieve that objective. These two separate but contingent transactions reflect the true strength and potential of both Revelyst and The Kinetic Group."
David Geenberg, Head of SVP’s North American Corporate Investment Team, expressed confidence in the acquisition of Revelyst, emphasizing the company's promising future. "We are strong believers in the Revelyst story and the potential of this business. With a portfolio of diverse, market-leading brands in the outdoor industry, Revelyst has an unparalleled opportunity to capture market share through its exceptional consumer focus and strengthen its platforms through its operational and supply chain enhancements."
From CSG's perspective, CEO Michal Strnad underscored the strategic fit of The Kinetic Group within CSG's portfolio. "We look forward to creating long-term value at The Kinetic Group as part of the CSG portfolio. The Kinetic Group has a deep heritage of delivering high-quality, innovative products, and we will provide significant resources, investment, and expertise to continue growing the business and serving its customers with leading ammunition products."
Transaction specifics and timeline
The SVP Transaction has received unanimous approval from Vista Outdoor’s Board of Directors and is expected to close by January 2025, contingent on the completion of the CSG Transaction. Vista Outdoor and CSG have already secured the required regulatory approvals for the CSG Transaction, and the deal is anticipated to close by the end of 2024, subject to stockholder approval and standard closing conditions. As part of the arrangement, the companies have agreed to extend the termination date of the CSG merger agreement to December 11, 2024.
Upon completion of the CSG Transaction, Vista Outdoor stockholders will receive $25.75 per share in cash and one share of Revelyst common stock for each share of Vista Outdoor common stock. Following the closing of the SVP Transaction, Revelyst stockholders will be entitled to an aggregate of $1.125 billion, equating to approximately $19.25 per share of Revelyst stock.
Additionally, amendments have been made to the separation agreement between Vista Outdoor, CSG, and SVP, simplifying the transaction structure. CSG will no longer be investing in Revelyst upon the completion of the CSG Transaction.
Impact on Vista Outdoor and the market
These transactions mark a pivotal shift for Vista Outdoor, enabling the company to focus on strategic growth opportunities while delivering significant value to its shareholders. The deal underscores Vista Outdoor’s commitment to aligning its portfolio with market opportunities and strengthening its core operations. The sale of Revelyst allows for a streamlined business model, while the acquisition of The Kinetic Group provides a competitive edge in the ammunition industry, a sector in which Vista Outdoor has deep expertise.
Advisors and closing considerations
Vista Outdoor's financial advisory for the deal comes from Morgan Stanley & Co. LLC, with Cravath, Swaine & Moore LLP providing legal counsel. Moelis & Company LLC acts as the financial advisor to the independent directors of Vista Outdoor, with legal support from Gibson, Dunn & Crutcher LLP. On CSG's side, J.P. Morgan and Clifford Chance LLP are leading the financial and legal advisory roles, respectively.
The SVP Transaction and the CSG Transaction, once completed, are expected to bring considerable strategic benefits to all parties involved. Stockholders are advised to review detailed documentation filed with the U.S. Securities and Exchange Commission (SEC) for more information regarding the transactions, including the proxy statement/prospectus.
About the companies
Vista Outdoor Inc. is a leading designer, manufacturer, and marketer of sporting and outdoor products. With a portfolio that includes well-known brands like Bushnell, CamelBak, Remington Ammunition, and Fox Racing, Vista Outdoor is committed to delivering innovative, high-quality products to its customers across its Outdoor Products and Sporting Products segments.
Strategic Value Partners, LLC (SVP) is a global alternative investment firm with a focus on special situations, private equity, and opportunistic credit. Managing approximately $19 billion in assets, SVP has a strong track record of unlocking value through strategic investments in diverse sectors.
Czechoslovak Group (CSG) is an international industrial and technological conglomerate owned by Czech entrepreneur Michal Strnad. CSG has key production facilities in multiple countries and a significant presence in industries such as automotive, defense, and aerospace. The acquisition of The Kinetic Group aligns with CSG's strategy of expanding its capabilities and presence in the defense and ammunition markets.
Conclusion
In connection with the announcement of the SVP Transaction and the CSG Transaction, the Company will adjourn the special meeting of stockholders currently scheduled for October 9, 2024. The dual transactions between Vista Outdoor, SVP, and CSG represent a significant restructuring of Vista Outdoor’s portfolio, aimed at unlocking shareholder value and positioning the company for future growth. As the market awaits the closure of these deals, the focus will be on how each party leverages its newfound assets to drive sustained value creation in the outdoor and ammunition industries. With regulatory approvals in place and stockholder meetings on the horizon, the successful completion of the SVP and CSG transactions could signal a new era for Vista Outdoor and its partners.
