TIG Advisors sends letter to Vista Outdoor board supporting MNC proposal

TIG Advisors, an investment adviser which owns approximately 532,000 shares of Vista Outdoor, sent a letter to the Vista Board of Directors regarding in support of MNC Capital’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. The letter read in part, “We are writing to the Board of Directors to share our views on why Vista should pursue the recent proposal by MNC Capital to acquire the Company and why the transaction is far superior to the pending acquisition of The Kinetic Group by Czechoslovak Group. 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 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.”