NEW YORK - Gates Capital Management, an event-driven alternative asset manager, holding approximately 9.6% of Vista Outdoor Inc .'s (NYSE: NYSE:VSTO) common stock, has publicly encouraged Vista to pursue an all-cash transaction for the sale of the entire company. This stance comes in the wake of a recommendation by Institutional Shareholder Services (ISS) on Friday, September 20, 2024, advising shareholders to vote against the current proposal to sell The Kinetic Group to the Czechoslovak Group a.s. (CSG).
The asset manager, which owns over 5.5 million shares in Vista, has expressed its intention to vote against the proposed sale, aligning with ISS's suggestion that a better outcome for shareholders would be achieved through a revised all-cash deal encompassing both The Kinetic Group and Revelyst. Gates Capital's position is based on the premise that the current proposal presents the least cash to Vista shareholders and subjects them to the risks associated with a standalone Revelyst, which they consider to be sub-scale and publicly traded.
Recent disclosures have revealed that a private equity firm has offered $1.1 billion in cash for Revelyst. Gates Capital emphasizes that the proposed CSG transaction, which excludes Revelyst, could prevent a potentially more lucrative sale of Revelyst to the private equity firm.
Gates Capital Management, founded in 1996, manages over $2 billion in assets. The company's statement is based on the belief that an all-cash offer for Vista would be more beneficial to shareholders, especially given the time-sensitive nature of the private equity firm's interest in Revelyst.
The press release from Gates Capital Management includes forward-looking statements, which are subject to risks, uncertainties, and assumptions. It cautions that these statements are not guarantees of future performance and actual results could differ materially.
This news article is based on a press release statement from Gates Capital Management.
In other recent news, Vista Outdoor Inc. is engaged in significant strategic maneuvers. The company has reaffirmed its commitment to an all-cash offer of $43 per share by MNC Capital Partners, L.P. to acquire the firm. At the same time, Vista Outdoor is also considering a transaction with Czechoslovak Group a.s. (CSG) for the acquisition of The Kinetic Group and an investment in Revelyst. This strategic move anticipates a substantial increase in Revelyst's Adjusted EBITDA and a run-rate cost savings of $100 million by fiscal year 2027.
Vista Outdoor has also agreed to sell a 7.5% stake in Revelyst to CSG for $150 million. Post-transaction, Revelyst plans to initiate a $50 million share repurchase program. However, Roth/MKM has downgraded Vista Outdoor's stock from Buy to Neutral, acknowledging potential long-term value in Vista Outdoor's Revelyst shares.
In terms of financial performance, Vista Outdoor reported a 7.1% decrease in total sales to $644.2 million and a 6.5% decline in earnings per share to $1.01. Despite these results, Revelyst is expected to double its Adjusted EBITDA sequentially for the quarter and the year. Lastly, Vista Outdoor has approved transaction incentive awards for two of its top executives, Jason Vanderbrink and Eric Nyman. These are the recent developments in Vista Outdoor Inc.'s operations.
InvestingPro Insights
In light of Gates Capital Management's push for an all-cash transaction for the sale of Vista Outdoor Inc. (NYSE: VSTO), a deeper look into the company's financial health and market performance may offer additional context for investors. According to real-time data from InvestingPro, Vista Outdoor's market capitalization stands at approximately $2.29 billion, reflecting the scale of the business in the current market. Despite a challenging environment, with a revenue decline of 9.21% over the last twelve months as of Q1 2025, the company's gross profit margin has remained robust at 31.27%, showcasing its ability to maintain profitability in tough times.
InvestingPro Tips highlight that Vista Outdoor's net income is expected to grow this year, suggesting potential for a turnaround from the loss indicated by a negative P/E ratio of -351.87. This anticipated growth in net income aligns with Gates Capital's interest in maximizing shareholder value through a sale. Additionally, the company's strong return over the last five years could be a signal of underlying value not fully reflected in the current proposal by the Czechoslovak Group a.s. (CSG).
It's worth noting that Vista Outdoor does not pay a dividend to shareholders, which may influence investor decisions regarding the attractiveness of an all-cash offer versus long-term holding for dividend income. For those interested in further analysis, there are 6 additional InvestingPro Tips available at InvestingPro, providing a more comprehensive view of Vista Outdoor's financial landscape.
With the next earnings date set for October 31, 2024, investors and stakeholders will be keenly watching for any updates that could impact the valuation and sale prospects of Vista Outdoor.
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