Vista Outdoor gets key regulatory approval and yet another increased bid from second suitor

The 10 largest shareholders of Vista Outdoor are major institutional shareholders that collectively own more than 50% of Vista's shares.

CSG has increased its offer for the ammunition brands twice, including earlier this week. Vista had multiple offers from the U.S. investment group MNC Capital, led by a former member of Vista's board of directors, for both the ammunition and outdoors businesses.

MNC Capital, which seemed to be betting that the CSG deal would not receive CFIUS approval, responded quickly on Wednesday morning, issuing a news release announcing that it has raised its bid to $42 a share, or approximately $3.2 billion, adding "it cannot see any possible basis or reason to further raise it."

The latest offer is MNC Capital's fourth and is at a 24% premium to Vista Outdoor's closing price on Tuesday, and $7 a share more than the bid the group made on Feb. 19.

"Given MNC's belief that its acquisition of Vista is in the best interests of shareholders, employees and national security, MNC decided to make one final effort for such acquisition by increasing its June 6, 2024, proposal from $39.50 per share all cash to $42.00 per share all cash," the group said in its news release.

MNC Capital, led by the former board member Mark Gottfredson, is a group of 10 U.S.-based family offices and institutional investors. MNC Capital was among the initial bidders to acquire the Kinetic Group but was outbid in October by CSG. The investors behind MNC regrouped and bid in February to acquire all of Vista Outdoor for $35 a share, and twice more raised their bid.

It's unclear if the $42 bid would be enough to disrupt the CSG deal. When the Vista board rejected MNC's previous bid of $39.50 a share on June 10, it pointed to eight MNC claims in its proposal that "contain inaccuracies not supported by the facts."

MNC Capital has repeatedly said it has the financing necessary for its bid and doesn't require a CFIUS review. MNC said in the release Wednesday that they believe a definitive agreement with Vista could be done in a matter of days.

Several observers believe MNC Capital's final bid warrants more attention.

"We believe shareholder pressure to accept the whole takeout offer could meaningfully increase now that the price has surpassed the $40 mark," wrote Anna Glaessgen, senior analyst at B. Riley Financial.

Given MNC's new offer, the shareholder advisory group, Institutional Shareholder Services (ISS), recommended that shareholders next week pause progress on the CSG deal.

ISS has written several reports on the deal, changing its recommendation to shareholders based on the changing offers and the CSG deal's status with the CFIUS.

Despite the recent developments, "our recommendation is that shareholders ABSTAIN on the proposed merger, and vote FOR the adjournment, for the purposes of facilitating an all-cash deal for the entire company that would entail less regulatory, execution, and market related risks than the proposed merger," ISS wrote on Wednesday.