As members of Vista Outdoor’s Board of Directors and fellow stockholders, we are reaching out to you regarding a pivotal decision at our upcoming July 23, 2024 Special Meeting. Our Board has remained resolute in its commitment to maximizing value for all Vista Outdoor stockholders.
With the Special Meeting drawing near, we believe it’s crucial for you to understand the rigorous process we undertook to unlock significant value for The Kinetic Group on behalf of our stockholders, and why we firmly believe this decision is optimal. We are securing the $2.1 billion value for The Kinetic Group and enabling stockholders to participate in Revelyst’s anticipated growth and margin expansion.
BOARD ENGAGED IN THOROUGH COMPETITIVE PROCESS TO MAXIMIZE STOCKHOLDER VALUE
Following the division of our Outdoor Products and Sporting Products segments in May 2022 to enhance operational efficiencies, we initiated a comprehensive review in September 2022 to explore various avenues for unlocking stockholder value. This process involved engagement with 26 entities, comprising 14 strategic players and 12 sponsors, all of whom received equitable and thorough consideration. Notably, Vista Outdoor conducted extensive discussions with MNC Capital (“MNC”), granting them access to approximately 4,900 documents, responding to over 1,050 data queries, holding more than 35 meetings or calls, and facilitating multiple site visits.
After a rigorous and competitive evaluation, and in consultation with our esteemed financial and legal advisors, we concluded that the sale of The Kinetic Group to Czechoslovak Group a.s. (“CSG”) (the “CSG Transaction”), alongside the separation of Revelyst as an independent public entity, represents the optimal path to unlock value for our stockholders. We stand by our recommendation to vote “FOR” the CSG Transaction at the forthcoming Special Meeting.
A VOTE “FOR” CSG TRANSACTION WILL DELIVER COMPELLING VALUE FOR STOCKHOLDERS AND CERTAINTY TO CLOSE
On July 8, 2024, we finalized an amendment to the merger agreement with CSG, increasing the acquisition price for The Kinetic Group to $2.1 billion (a $190 million increase from CSG’s initial offer) and boosting the cash consideration to $21.00 per share of Vista Outdoor common stock (an $8.10 increase per share from the original cash offer). In consequence of the CSG Transaction, stockholders will receive one share of Revelyst common stock and $21.00 in cash per share of Vista Outdoor common stock.
A vote “FOR” the CSG Transaction signifies:
- Maximizing the value of The Kinetic Group business, fulfilling the Board’s primary objective since announcing the segment separation in May 2022. CSG’s $2.1 billion purchase price reflects robust value for The Kinetic Group, resulting from an exhaustive and competitive process.
- Empowering stockholders to participate in Revelyst’s independent journey. Through the CSG Transaction, Vista Outdoor stockholders will become stakeholders in Revelyst, poised to benefit from its projected growth. The company has reaffirmed its annual guidance, anticipating to double standalone Revelyst EBITDA in fiscal year 2025, with a clear path to achieving over $100 million in run-rate cost savings by fiscal year 2027 and sustaining mid-teens EBITDA margins in the long run. As a dedicated outdoor entity, Revelyst possesses significant potential to unlock superior value for stockholders, bolstered by expanded strategic opportunities and enhanced ability to attract and retain talent.
- Assurance of deal certainty and timely closure in July. Vista Outdoor and CSG have obtained all required regulatory approvals as stipulated in the merger agreement, positioning themselves to finalize the transaction in July 2024, contingent upon stockholder endorsement and fulfillment of customary closing conditions.
The Board remains open-minded and committed to maximizing the value of Revelyst, akin to our approach in maximizing The Kinetic Group’s value. In the event the CSG Transaction is approved, stockholders retain the option to realize potential premium changes in control for Revelyst in the future. We are receptive to opportunities aimed at maximizing stockholder value, including exploring various strategic alternatives for Revelyst when deemed appropriate and at a favorable valuation. If a strategic sale of Revelyst proves advantageous, the Board pledges to engage in a thorough and competitive process to optimize value for stockholders, mirroring our efforts with The Kinetic Group.
Each of Vista Outdoor’s financial advisors has provided an opinion affirming the fairness, from a financial standpoint, of the considerations offered in the CSG Transaction to Vista Outdoor’s common stockholders. We are confident the CSG Transaction represents the most compelling option for stockholders.
A VOTE AGAINST THE CSG TRANSACTION DOES NOT IMPLY ENGAGEMENT WITH MNC CAPITAL
Following careful evaluation, the Board unanimously reviewed and dismissed MNC’s final offer to acquire Vista Outdoor in an all-cash transaction at $42.00 per share (the “MNC Final Offer”). After consulting with financial and legal advisors, the Board concluded that:
- The MNC Final Offer undervalues Vista Outdoor, particularly the Revelyst business. MNC’s proposal is opportunistic and seeks to acquire Revelyst at a discounted rate outside of a formal sale process. It does not factor in Revelyst’s anticipated EBITDA growth under new management or the potential for Vista Outdoor stockholders to realize future change of control premiums. Compared to the MNC Final Offer, the CSG Transaction provides stockholders with $7-$16 more per share in value.
- The MNC Final Offer poses substantial execution risks and could take several months to finalize. Despite six weeks of engagement with MNC in May and June 2024, in addition to extensive prior interactions before the CSG merger agreement, MNC’s proposal remains subject to further due diligence. Additionally, its financing involves new debt and equity partners, details of which have not been disclosed publicly, contrary to customary practices in similar transactions. Moreover, MNC has no prior transaction completion record.
- There is no assurance that MNC will uphold its $42 per share bid, particularly if stockholders reject the CSG Transaction without competitive pressures. Throughout the process, MNC has impeded competitive offers.
The Board has found no justification to engage with MNC regarding its final offer, given MNC’s stance that it “cannot see any possible basis or reason to further raise [its proposal].”
Importantly, voting against the CSG Transaction at the Special Meeting does NOT signify the Board’s intent to resume discussions or negotiations with MNC, for the reasons outlined above. In the event the CSG Transaction fails to gain approval at the Special Meeting, the Board will explore all available strategic options for Vista Outdoor, guided by our fiduciary responsibilities.
At the upcoming July 23, 2024 Special Meeting, you will play a crucial role in shaping the future of your investment. The Board of Directors unanimously recommends voting “FOR” the CSG Transaction. We firmly believe this transaction offers compelling value and serves the best interests of all Vista Outdoor stockholders.
Sincerely,
Vista Outdoor Inc.’s Board of Directors
By Michael Callahan, Chairman of the Board of Directors
The special meeting of Vista Outdoor stockholders, including a vote on the proposal to adopt the merger agreement with CSG, will be held virtually on July 23, 2024, at 9:00 a.m. Central Time. For additional details, please refer to Vista Outdoor’s proxy statement/prospectus and its supplements filed with the U.S. Securities
