As we’ve noted before, there seems to be animosity between MNC Capital and Camp Chef parent, Vista Outdoor. There’s been a bunch of back and forth throughout Vista’s sale process. That trend hasn’t changed, and I’ll give you the latest tea.
MNC Capital has been spurned by Vista a bunch of times at this point, as they’ve stuck with their deal with CSG, and ultimately opened their process to other strategic options. MNC sent another updated offer last weekend, that they continue to believe is superior for the shareholders.
MNC is now prepared to offer an increased all-cash purchase price of $43.00 per share for Vista, despite substantial market headwinds for consumer spending and softness in Vista’s recent quarterly results.
MNC Captal Letter to the Vista Board
It wasn’t an offer that Vista would have much time to think about though, it had a quick deadline to it.
Our revised offer is conditioned on the Vista Board, by Monday, September 9, having given notice to CSG that it intends to sign the Merger Agreement at $43.00 per share, so that it can be signed by September 13. Otherwise, our revised offer will be withdrawn.
MNC Capital Letter to the Vista Board
To sign a merger agreement with MNC, Vista would have to give notice to CSG four days ahead of time. That means that Vista would have to effectively accept the MNC offer on the 9th.
Vista Outdoor released their own statement criticizing the very tight turnaround, and the continued public nature of MNC’s dealings. They claim they received MNC’s offer on the 6th after 10pm.
The Vista Outdoor Board of Directors has been negotiating extensively with MNC. Notwithstanding our good faith efforts, MNC sent the Board a revised proposal last evening after 10:00 PM ET that expires on Monday. The public communication by MNC only hours after delivery of the proposal as well as the Monday expiration continue a frustrating pattern and is not constructive. Vista Outdoor’s Board of Directors remains driven to maximize value for stockholders, will continue discussions with MNC and other parties, and looks forward to updating our stockholders in due course
Vista Outdoor Response
That’s not where the public interaction ended. MNC Capital had another press release response to what Vista Outdoor said. They claim that the turnaround was tight because Vista hasn’t been engaging with them for periods of time.
Vista Outdoor Inc. (“Vista”) announced on July 30 that it was going to re-engage with MNC. Immediately after that, MNC informed Vista that it required a fully negotiated Merger Agreement before it could consider revising its offer. Despite this, for almost three weeks Vista did not engage on negotiating a Merger Agreement or provide any of the related Schedules.
During the past two weeks, Vista engaged and provided comments on the draft Merger Agreement that had been sent on March 25. After extensive negotiations of the Merger Agreement (and review of the Schedules) MNC submitted its revised offer of $43 per share this past Friday, which included a full financing package alongside of proof of funds for all equity sources.
MNC had informed Vista ahead of last Friday that MNC intended to submit a revised offer for review by the Vista Board of Directors over this past weekend. Since the revised offer was submitted last Friday, there has not been any substantive response or engagement by Vista other than their short press release acknowledging our offer.
MNC Capital Press Release 9/9/24
MNC continues to say that there has been degradation in valuation for comparable public companies. This is due to macro headwinds to the consumer.
Our Take
Like most disagreements, there is likely some truth to both sides. We haven’t seen the details of MNC Capital’s offer, but MNC’s thinking is that it is far superior to selling the Kinetic Group to CSG and taking Revelyst (the Outdoor Products division) public.
The problem with that, like with managing to all corporate earnings, is that it’s a shortsighted view. We’re likely at or near a bottom for outdoor products brands.
That surely fits into MNC’s thesis, because it doesn’t make sense to talk about how bad a company is, then increase your offer for it. They aren’t running a charity, so they must see value, and significant upside.
If Revelyst went public in the current environment, I think it would have a relatively low valuation. Investors are shortsighted, so they’re overly focused on the environment today.
Interest rates will drop, homes will get easier to buy, and the economy will recover. When that happens, Revelyst would also see an increase in value. Revelyst has some industry leading brands in their portfolio to drive future value.
The unknown is how long it will take to get there, and if current investors have the appetite to see the longer term. If Vista ultimately doesn’t want to sell to MNC for one reason or another, they need to come up with a strategic alternative to get investors on board.