TIG Advisors Sends Letter to Vista Outdoor Board Supporting MNC All-Cash Acquisition
12 Julio 2024 - 9:33AM
Business Wire
Believes MNC Capital Fully Financed $42 Cash
Per Share Offer is Far Superior to the Pending Acquisition of The
Kinetic Group by Czechoslovak Group
Intends to Vote Against the Pending Acquisition
of The Kinetic Group by Czechoslovak Group
TIG Advisors, LLC, an investment adviser which owns
approximately 532,000 shares of Vista Outdoor Inc. (NYSE: VSTO)
(“Vista” or the “Company”) today sent a letter to the Vista Board
of Directors regarding its support of MNC Capital, L.P.’s proposed
all-cash offer to acquire the Company for $42 per share and its
intention to vote against the pending sale of The Kinetic Group to
Czechoslovak Group a.s. ("CSG").
The full text of the letter follows.
July 12, 2024
The Board of Directors Vista Outdoor Inc. 1 Vista Way Anoka, MN
55303
Dear Members of the Board,
TIG Advisors, LLC and its affiliates collectively own
approximately 532,000 shares of Vista Outdoor Inc. (“Vista” or the
“Company”). We are writing to the Board of Directors (the “Board”)
to share our views on why Vista should pursue the recent proposal
by MNC Capital, L.P. (“MNC”) to acquire the Company and why the
transaction is far superior to the pending acquisition of The
Kinetic Group by Czechoslovak Group a.s. (“CSG”).
The MNC offer presents both maximum certainty of value and less
execution risk. MNC has made its commitment clear, compensating
Vista shareholders with $42 per share in cash. MNC has delivered on
Vista’s asks, including delivery of financing and a merger
agreement, and yet the Board now decides to change the goal posts
arguing that the transaction will take months to close. This is a
spurious argument given that the Board’s own “GEAR Up”
transformation plan requires years to achieve and exposes
shareholders to significant execution risk. Further, the Company
has relentlessly pressured the market to believe that the MNC offer
significantly undervalues Revelyst based on an unproven turnaround
story.
Vista shareholders should not have to fight for the Board to
execute the superior MNC transaction. The Board has expressed
concerns about the execution risk of the MNC offer. We urge the
Board to negotiate appropriate protections. The Board, acting as
fiduciaries to shareholders, should choose to execute the MNC
transaction given it is in the best interests of all
shareholders.
The market has spoken, implying at $36.41 per share (VSTO price
as of close on 7/10 prior to ISS recommending the MNC bid) that the
value of the Revelyst stub is, at best, $15.41 per share. Moreover,
the $42 per share offer from MNC is likely keeping some premium in
the stock. To match the value of the MNC bid implies a stub value
of $21 per share. Thus, the stub would need to be worth $5.59 per
share more, or a 36.3% premium to the current implied stub value.
Meanwhile, the Company’s unrealistic potential trading values for
Revelyst are based on aggressive assumptions that they can double
EBITDA in FY2025 and trade at 10.0x EV/EBITDA, the high end of the
Company’s advisors’ estimate potential EV/EBITDA trading range of
7.0x to 10.0x.
While the Board has done a good job at extracting value, we find
it disturbing that the Board is now threatening shareholders,
indicating that it will not reengage with MNC regardless of the
outcome of the shareholder vote. Thus, forcing shareholders
to either accept the CSG deal or nothing. We urge the Board to
listen to shareholders and reconsider its stated position that it
will not negotiate with MNC.
If the transaction with CSG is voted down, we believe it is a
strong signal that shareholders prefer the immediate and certain
value of the $42 per share MNC offer. We believe the MNC offer is a
clear premium to the total value created from the combination of
the transaction with CSG and the Revelyst stub. We see it now as
a clear choice to vote against the CSG transaction and, in doing
so, call upon the Board to engage with MNC.
Regards,
Drew Figdor Portfolio Manager
Who is TIG Advisors?
TIG Advisors, LLC (“TIG”) is an SEC registered investment
advisor that is a subsidiary of AlTi Global, Inc. based in New York
City with approximately $2.1 billion in AUM, representing a diverse
range of investment strategies primarily for institutional
investors, including pension funds, life insurance companies and
others. TIG, founded in 1980, has long held a goal of working
constructively with management teams to help identify, surface, and
capture value that may not be otherwise apparent to the
marketplace.
TIG believes in three key governance principles as it relates to
the conduct of the boards of the companies that we invest in:
- Accountability and Engagement – the board holds itself
accountable to stockholders and maintains an active and responsive
engagement process with its stockholders. Effective engagement
includes actively soliciting stockholder views on significant
matters that impact long-term stockholder value and being
responsive to the expressed views of stockholders.
- Transparency – the board maintains a transparent strategic and
decision-making process, open to scrutiny from stockholders. The
board should provide timely and complete information to
stockholders to allow them to evaluate board decisions and make
informed voting and investment decisions.
- Independence and Alignment – board members are independent
enough to diligently supervise management, ensuring that they act
in the interests of stockholders. Boards should have effective,
aligned and independent leadership that is focused on preserving
and enhancing stockholder value on a time and risk-adjusted
basis.
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