Plans to sell Federal ammunition to Czech company progress as U.S. group makes another offer

A U.S.-based investment group has increased its takeover offer for Vista Outdoor, as the Anoka-based company's own strategic plan progresses through regulatory hurdles.

MNC Capital on Monday raised its takeover offer for company from $35 to $37.50 a share. The updated offer from the Texas-based private investment group would take Vista private.

Vista in its statement late Monday said its board would perform due diligence on the new offer but stood by its previous endorsement a plan to sell the Kinetic Group — which includes Federal and other ammunition brands — to the Prague-based Czechoslovak Group (CSG) and spin off its outdoor products unit as a new public company called Revelyst.

Vista's plan reached a milestone last week with the Securities and Exchange Commission declaring "effective" Vista's registration of its Revelyst spinoff. That means the transaction can start to "unlock stockholder value and support long-term growth of Revelyst," the company said in a statement.

With the SEC's latest move, Vista set a May 16 meeting for shareholders to approve the deal.

"Revelyst's registration statement being declared effective by the SEC moves the Kinetic Group one step closer to beginning our new chapter as part of CSG, which solidifies our strategic direction and will underpin investments in our employees, brands and local communities," said Jason Vanderbrink, CEO of the Kinetic Group, in a statement.

However, the CSG acquisition, beyond regular approvals, needs a crucial OK from the Department of Treasury's Committee on Foreign Investment in the United States (CFIUS). Vista has said it is confident it will get the approval.

But MNC said Czech ownership could be an issue in the CFIUS case.

In MNC's previous offer letter it emphasized that the sale of a U.S. ammunition company to a foreign entity would represent a national security risk.

J.D. Vance, a Republican senator from Ohio, also has raised objections to the Vista/CSG deal in a letter to Janet Yellen who as treasury secretary serves as chair of CFIUS. "Until it can be proven that this transaction will not jeopardize our national security, I respectfully urge you to deny the sale of Vista Outdoor's sporting products business to the Czechoslovak Group," Vance wrote.

Vista currently is one of the largest ammunition providers to the U.S. military and law enforcement agencies around the United States and is already one of the largest makers of primers. A primer a critical component of ammunition that ignites the propellant powder.

If the CSG deal goes through, it would give the resulting company 70% of the primer market worldwide, said sources close to MNC who wished to remain anonymous because they were not authorized to speak publicly.

MNC Capital is led by managing director Mark Gottfredson, a 10-year board member of Vista Outdoor who resigned from his position in January. The group is a mix of family offices and institutional investors, the sources said.

MNC Capital has said it wouldn't need regulatory approval from CFIUS for its deal.

Family offices are investment vehicles for private wealth that typically take a long view of investments, sometimes for decades instead of the typical five- to seven-year holding periods of most private equity groups.

The revised offer is the latest twist in a nearly two-year plan to split the two business Vista units. Originally, the Kinetic ammunition unit was also going to be a spun-off public company.

According to deal documents CSG Group would have to pay a $114.6 million termination fee if it failed to get all the necessary approvals. Vista on the other hand would owe CSG Group a termination fee of $47.8 million if it were to accept a competing offer.

In the CSG deal Vista shareholders would get $12.90 per share in cash and one share of Revelyst Inc. In its offer letter Monday MNC Capital said its deal would value Revelyst much higher than Vista had earlier.

"MNC's $37.50 per share proposal values Revelyst at $1.1 billion, a 93% premium to Vista's own $570 million implied Revelyst standalone value from its investor presentation dated Feb. 1, 2024," the letter said.