Mar 7, 2024 - Business

CFIUS deadline looms on $1.9B Czech bid for Vista Outdoor ammo unit

CFIUS

U.S. Assistant Treasury Secretary for Investment Security Paul Rosen speaks during the second annual CFIUS conference at the Treasury Department in Washington D.C., Sept. 2023. (Photo by Alex Wong/Getty Images)

Vista Outdoor (NYSE: VSTO) revealed in a filing this week that the deadline for the U.S. government's review of a $1.9 billion bid for the company's ammunition unit is just weeks away.

Why it matters: A seller of sporting goods and ammunition, Vista has fielded another offer for the entire company from a suitor that believes the ammo division should go to a U.S. buyer.

Zoom in: Vista said in the filing that the Committee on Foreign Investment into the United States (CFIUS) initiated a 45-day review on Feb. 12 into the company's agreement to sell its ammo division to the Czechoslovakia Group (CSG). The review could be extended to 60 days, according to the filing.

  • Vista said that if there are no national security concerns, CFIUS will clear the $1.9 billion deal, but "if CFIUS determines that there are unresolved national security concerns, it may recommend that the President of the United States suspend or prohibit the Transaction."
  • The timeframe laid out in the filing gives late March to mid April as the expected CFIUS ruling.

The intrigue: Vista's effort to complete the CSG deal comes as MNC Capital is vying to buy the entire company for $35 per share, an offer that values the company at $2.9 billion including debt.

  • MNC is a family office run by Mark Gottfredson, who previously sat on Vista Outdoors' board.

How it works: Vista's two main businesses are what it calls Outdoor Products — gear such as CamelBak water packs and Camp Chef stoves.

  • The other is what it calls Sporting Products — ammo and related components that it sells to hunters and U.S. state and federal law enforcement agencies, including the U.S. Army.
  • Gottfredson believes that MNC can grow the entire company, both gear and ammunition, and that the ammo unit should remain in U.S. hands. He says MNC has financing lined up for an acquisition that would face no CFIUS scrutiny.
  • "The Transaction would allow the Sporting Products business and its critical national security assets to remain under U.S. ownership and would create value certainty and enhanced sponsorship for the Outdoor Products business," MNC said in its letter to Vista's board.

Zoom in: Last week, Vista Outdoors rejected MNC's bid on several grounds, including that it undervalued the Outdoor Products business. Vista said it was sticking with the CSG agreement.

  • The main reason Vista wants to stay with the CSG deal is that once completed, the Outdoor Products business will be spun off into a publicly traded, independent company that it's rebranded as Revelyst.
  • Vista says that MNC's offer undervalues that business.

By the numbers: Vista's 2023 earnings show that ammunition sales were $1.8 billion and the outdoor gear business brought in $1.3 billion.

What we're watching: The future direction of the company right now rests in the hands of U.S. government officials. CFIUS' verdict will likely either move the CSG agreement forward or force Vista into reset mode.

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