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Gates Capital Management, Vista Outdoor’s second-largest shareholder, announced that it was opposing the $2.1 billion sale of Kinetic Group to foreign-based Czechoslovak Group (CSG), preferring an all-cash takeover bid.
Vista was expected to approve its sale to ammunition company CSG after the Committee on Foreign Investment in the country approved the deal on June 25, but support for the sale is now up in the air. Gates Capital Management has announced that it believes it would be in the best interest of shareholders to sell the entirety of Vista to U.S.-based MNC Capital.
“We believe that MNC Capital’s $42 per share acquisition offer to acquire all of Vista’s shares represents a reasonable starting point for Vista to negotiate a more favorable transaction than CSG’s current proposal,” Gates Capital Management said in a press release.
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In addition to the sale option to MNC, Gates Capital Management will also support Vista’s original plan to separate Kinetic Group from its outdoor division, Levelist, and spin it off tax-free to consider what is best for Vista shareholders.
MNC is currently preparing an all-cash takeover bid of $3.2 billion for Vista, which it has increasingly said is its final revised offer since making the offer. MNC said its offer represents approximately $700 million above Vista’s market value on the day before its initial offer.
Remington 223 caliber cartridge. (Silas Stein/Photo Alliance via Getty Images/Getty Images)
Despite MNCs offering bigger packages, Vista is adamant about selling only the ammunition company in order to grow its outdoor brands.
“MNC’s final instructions significantly undervalue Vista Outdoor overall and the Levelist business in particular,” Vista said in a press release earlier this month.
In addition to Gates Capital Management’s opposition to the sale to CSG, third-party consultancy group ISS announced it was reversing its decision to support Kinetic Group’s sale to CSG, although another third-party consultancy group, Glass, Lewis & Co., recommended the sale to the foreign company.
In a report obtained by FOX Business, ISS said Vista’s reasons for rejecting the deal continued to change over time. ISS acknowledged that it had concerns about MNC, but explained that those could have been resolved with continued communication.
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“Concerns remain regarding MNC’s limited public negotiations and the fact that its proposal is still subject to due diligence…It is reasonable to speculate that these issues may have been resolved had the company renegotiated with MNC after June 26.”
In its latest report, Glass Lewis said it felt CSG’s $2.1 billion takeover bid was “the best option to maximise shareholder value” pending an improved takeover offer from MNC.
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“Glass Lewis’ support reaffirms our confidence that the ongoing transaction with CSG is in the best interests of Vista Outdoor shareholders,” Vista said in a statement on Thursday.
Vista is scheduled to hold a shareholders meeting on July 23 to vote on the proposal to sell The Kinetic Group to CSG.
