CSG Increases Offer for Vista’s Kinetic Group, Offers to Buy Some of Revelyst

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On the heels of the back and forth between Vista Outdoor and MNC Capital, CSG has increased their offer to Vista. In addition to buying the Kinetic Group from Vista, they will spend $150 million for 7.5% of Revelyst, which is the business unit where Camp Chef resides.

It appears that Vista would prefer to deal with CSG, and this is a creative way to try to make the offer better to shareholders. By agreeing to spend $150 million for 7.5% of Revelyst it establishes a market value of $2 billion for the company.

Vista is using that valuation to show that the offer is better than the offer from MNC Capital.

Vista Outdor SOTP Valuation
Vista Outdoor SOTP Valuation

The possible flaw with that thinking is Revelyst would have to retain that valuation after going public to be the better offer for shareholders. CSG could see the $150 million as the additional cost of acquiring the Kinetic Group and may not care that the value of that investment goes down because the multiple on the whole deal makes sense.

Shareholder Conflict of Interest

Gates Capital is the second largest shareholder in Vista Outdoor, holding near 10% of the company at the end of July. They also have been outspoken in their support of Vista selling to MNC Capital.

After carefully reviewing the revised offer and the updated financial results, we strongly believe that the proposed transaction from CSG is not in the best interest of shareholders and that the Company should immediately begin negotiating a merger agreement with MNC.

Gates Capital Press Release Dated July 26, 2024

It was revealed today that Gates Capital is part of MNC’s equity consortium. That’s at the very least a conflict of interest because they are saying as a large shareholder it’s in the best interest to sell to MNC Capital, of which they are also an equity holder.

It’s easy to imagine that they are biased in their decision making process because they stand to benefit on both sides of the transaction. Other shareholders should consider this when evaluating the different sale opportunities.

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