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Update at 12:30 pm on 11/23: Add a comment from Vista Outdoor.
Outdoor view (New York Stock Exchange:VSTO) rose 3% in after-hours trading after Colt CZ Group proposed a commercial partnership that would value Vista at $30 per share.
Vista Outdoor owner Colt’s plan includes a $900 million buyback that would be executed after closing, financed by $600 million of new equity issued at the transaction price and a $300 million increase in debt, according to a letter Colt wrote to Vista’s board of directors on Wednesday. Colt has a 5.7% stake in Vista, according to its latest report 13D Presentation.
Colt’s offer comes after Vista Outdoor (VSTO) revealed in October that it had reached an agreement to sell its sporting goods business to the Czechoslovak Group for an enterprise value of $1.91 billion in an all-cash transaction. The news sent Vista shares plunging 24% on Oct. 16, when the deal was announced, which followed Vista’s original announcement in May 2022 that it planned to split the company into separate entities.
“We would keep the company together, allowing continued growth for current Vista shareholders with the ‘New Vista’ maintaining its US listing.” Jan Drahota, CEO of Colt, wrote in the letter. “The market opinion on the Czechoslovak group’s transaction was clear in its reaction to the announcement, which resulted in a rapid drop in the share price on October 16, 2023. Colt CZ is clear that, with the separation of the products segment sporting goods, the remaining outdoor products segment will be subscale as an independent public company with substantial risk.”
The board of directors of Vista (VSTO) has not made any determination regarding Colt’s proposal within the framework contemplated by the existing merger agreement with CSG, which remains in force, nor has it changed its recommendation in support of the acquisition of its business of Sport products. by CSG, Vista said in a statement Wednesday night. The board will “carefully” review Colt’s proposal.
Under Colt’s proposal, holders of Vista (VSTO) would own about 55% of the new Vista after closing, according to the letter. The new company would have post-transaction net leverage of approximately 1.8 times fiscal LFY adjusted EBITDA.
“Its shareholders are also concerned about the Sporting Products transaction,” Colt’s Drahota wrote in the letter. “This deal raises regulatory risks and prolongs the time it will take to separate the businesses. Separation expenses have already exceeded $50 million and this process has created significant distraction and turnover that must be addressed.”
Vista Outdoor (VSTO) did not immediately respond to Looking Alpha’s email request for comment.
Vista Outdoor (VSTO) is scheduled to be presented at the Morgan Stanley Global Consumer and Retail Conference on December 6 and at ROTH MKM 12.th Annual Deer Valley event on December 14.
Morgan Stanley is acting as exclusive financial advisor to Vista Outdoor (VSTO) and Cravath, Swaine & Moore LLP is acting as legal advisor to Vista. Moelis & Co. is acting as exclusive financial advisor to the independent directors of Vista and Gibson, Dunn & Crutcher LLP is acting as legal advisor to the independent directors of Vista/
