MNC Capital proposes to acquire Vista Outdoor for $35 per share

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DALLAS – MNC Capital Partners, L.P. has put forward a proposal to acquire Vista Outdoor (NYSE:VSTO) Inc. for $35.00 per share, a transaction that would keep the Sporting Products division under U.S. ownership and offer a premium to the company’s current stock price.

The offer, made on February 19, 2024, suggests a cash acquisition that would not require a Committee on Foreign Investment in the United States (CFIUS) review, unlike the current proposed sale of Vista’s Sporting Products division. MNC’s proposal comes after Vista Outdoor’s share price was trading below $30.00, with the bid representing a significant premium.

MNC highlighted the national security relevance of the Sporting Products business, citing its significant ammunition and primer manufacturing capabilities. The acquisition would ensure that these assets remain with an American owner, aligning with national security interests.

The bid also suggests that Vista Outdoor’s Outdoor Products division, which is set to become a separate public company, would benefit from private ownership to accelerate growth and development, especially after the divestiture of the Sporting Products business.

Vista Outdoor has responded to MNC’s proposal, stating that its board is reviewing the offer in line with its fiduciary duties and is expected to provide a response next week.

The transaction, according to MNC, would not be contingent on financing, as the firm claims to have already conducted due diligence on Vista’s Sporting Products segment and has prepared to move quickly towards finalizing a deal upon completion of due diligence on the Outdoor Products segment.

This news is based on a press release statement from MNC Capital Partners, L.P.

InvestingPro Insights

As MNC Capital Partners eyes the acquisition of Vista Outdoor Inc . (VSTO) at $35.00 per share, the deal offers a notable premium over the current market valuation. InvestingPro data indicates that Vista Outdoor has a market capitalization of approximately $1.9 billion, with a recent closing price of $31.20. This positions the offer at a near 12% premium over the latest closing price, which may appeal to shareholders considering the company’s performance and outlook.

InvestingPro Tips suggest a mixed financial picture for Vista Outdoor. On the positive side, the company is expected to see net income growth this year, with two analysts revising their earnings projections upward for the upcoming period. This optimism is underscored by a valuation that implies a robust free cash flow yield, signaling potential for shareholder value creation. Additionally, Vista Outdoor’s liquid assets surpass its short-term obligations, providing financial stability.

However, it’s important to note that analysts anticipate a sales decline in the current year, and the company was not profitable over the last twelve months. Yet, the consensus among analysts is that Vista Outdoor will return to profitability this year. With a strong return over the last five years, investors may find the acquisition proposal by MNC Capital Partners compelling, despite the lack of dividends for shareholders.

For those interested in a deeper dive into Vista Outdoor’s financial health and future prospects, InvestingPro offers additional insights and metrics. Readers can find more InvestingPro Tips by visiting https://www.investing.com/pro/VSTO. There are currently 9 additional tips available, which could provide valuable context for shareholders evaluating the acquisition offer.

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