ANOKA, Minn. - Vista Outdoor Inc . (NYSE:VSTO), a leading global designer and manufacturer of outdoor sports and recreation products, has announced an amendment to its merger agreement with Czechoslovak Group a.s. (CSG), increasing the base purchase price for the acquisition of The Kinetic Group business by an additional $40 million, bringing the total to $2 billion.
The cash consideration for Vista Outdoor stockholders has also been raised from $16.00 to $18.00 per share of common stock, a 12.5% increase. Shareholders will receive one share of Revelyst common stock along with the cash consideration at the closure of the CSG Transaction. This revised offer represents a $5.10 increase from the original cash consideration of $12.90 per share.
Vista Outdoor plans to return approximately $77 million of excess cash to its stockholders, on top of the purchase price increase, as a result of continued strong cash generation by the company.
The Board of Directors at Vista Outdoor reaffirms its recommendation that shareholders vote in favor of the transaction with CSG. The company is confident that the transaction will maximize shareholder value by delivering a significant purchase price increase, allowing shareholders to benefit from additional excess cash, and enabling them to capture the long-term value of Revelyst as a standalone public company.
CSG, known for its commitment to U.S. manufacturing and supply chain excellence, aims to provide a stable, long-term investment in Vista Outdoor's American workforce and leading ammunition brands.
The transaction is anticipated to close within the 2024 calendar year, subject to approval by Vista Outdoor's stockholders, clearance by the Committee on Foreign Investment in the United States (CFIUS), and other customary closing conditions. Vista Outdoor remains optimistic about receiving CFIUS clearance and meeting all closing conditions.
Morgan Stanley (NYSE:MS) & Co. LLC and Cravath, Swaine & Moore LLP are advising Vista Outdoor, while Moelis (NYSE:MC) & Company LLC and Gibson, Dunn & Crutcher LLP are advising its independent directors.
The information in this article is based on a press release statement by Vista Outdoor Inc.
In other recent news, Vista Outdoor Inc. has experienced a series of significant events. The company has rejected a $3 billion acquisition proposal from MNC Capital, opting instead to uphold its merger agreement with Czechoslovak Group (CSG) for the sale of its Kinetic Group division for $1.96 billion. In addition, Vista Outdoor received a competing $2 billion offer for the Kinetic Group from a U.S. private investment firm.
Despite these developments, B.Riley has shown confidence in Vista Outdoor's growth potential, maintaining a Buy rating on the company's stock. On the other hand, Lake Street Capital Markets has downgraded Vista Outdoor from Buy to Hold.
In terms of financial performance, Vista Outdoor has reported strong Q4 total sales reaching $2.75 billion and adjusted EBITDA margins at 16.1%. These are recent developments surrounding Vista Outdoor Inc.
InvestingPro Insights
In light of Vista Outdoor Inc.'s (NYSE:VSTO) recent announcement regarding the merger agreement with Czechoslovak Group a.s. (CSG), investors may find the following insights from InvestingPro valuable for assessing the company's financial health and future prospects. Vista Outdoor's market capitalization stands at $1.99 billion, reflecting the size and scale of the business in the outdoor sports and recreation market.
Despite a challenging environment, reflected in a revenue decline of 10.84% over the last twelve months as of Q4 2024, the company has maintained a solid gross profit margin of 31.28%. This indicates that Vista Outdoor has been able to preserve its profitability on the goods sold, an important factor when considering the increased purchase price for The Kinetic Group business.
One of the notable InvestingPro Tips for Vista Outdoor is the high shareholder yield, which is a positive sign for investors looking for companies that return value. Additionally, analysts predict that the company will be profitable this year, which could be a pivotal factor for shareholders evaluating the benefits of the transaction with CSG and the future standalone potential of Revelyst.
For those interested in further insights and tips, InvestingPro offers additional analysis, including the potential strong free cash flow yield implied by the company's valuation. To access these insights, visit https://www.investing.com/pro/VSTO. Moreover, investors can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, gaining access to a total of 8 additional InvestingPro Tips for Vista Outdoor.
As shareholders consider the amended merger terms and the anticipated return of excess cash to stockholders, these financial metrics and expert tips provide a deeper understanding of Vista Outdoor's position in the market and its future profitability potential.
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