Updated at 12:30 p.m. on 11/23: Adds a comment Vista Outdoor.
Outside view (NYSE:VSTO) increased by 3% outside trading hours after Colt CZ Group proposed trade compensation that would value Vista at $30 per share.
Vista Outdoor owner Colt’s plan includes $900 million buyout which would be executed after closing, financed by $600 million of new equity issued at the transaction price and an additional $300 million of debt, according to a letter Colt wrote to Vista’s board of directors on Wednesday. Colt owns a 5.7% stake in Vista, according to its latest 13D classification.
Colt’s offer comes after Vista Outdoor (VSTO) revealed in October that it had reached an agreement to sell its sports products business to the Czechoslovakian group for an enterprise value of $1.91 billion in a an all-cash transaction. The news caused Vista shares to fall 24% on October 16, when the deal was announced, which followed Vista’s initial announcement in May 2022 that it planned to split the company into separate entities.
“We would keep the company together, allowing continued growth for existing Vista shareholders, with ‘New Vista’ retaining its U.S. listing.” Jan Drahota, CEO of Colt, wrote in the letter. “The market’s opinion on the transaction of the Czechoslovakian group was clear in its reaction to the announcement, which led to a rapid fall in the share price on October 16, 2023. It is obvious to Colt CZ that with the separation of the Sporting Products segment, the remaining Outdoor Products segment will be a standalone public company with substantial risks.
The Vista Board of Directors (VSTO) has not made any decision regarding the Colt proposal within the framework contemplated by the existing merger agreement with CSG, which remains in effect, nor has it changed its recommendation in favor of the acquisition of its Sporting Products business. by CSG, Vista said in a statement Wednesday evening. The board will “carefully” consider Colt’s proposal.
Under Colt’s proposal, Vista (VSTO) holders would own approximately 55% of the new Vista after closing, according to the letter. The new company would have post-transaction net leverage of approximately 1.8x prior year’s adjusted EBITDA.
“Your shareholders are also concerned about the Sporting Products transaction,” Colt’s Drahota wrote in the letter. “This agreement poses regulatory risks and extends the time required to separate the companies. Separation expenses have already exceeded $50 million and this process has created a distraction and significant turnover that must be resolved.”
Vista Outdoor (VSTO) did not immediately respond to Seeking Alpha’s email request for comment.
Vista Outdoor (VSTO) is scheduled to present 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 serving as exclusive financial advisor to Vista Outdoor (VSTO) and Cravath, Swaine & Moore LLP is serving 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/