Texas oilman split with MNC for second shot at Vista's ammo unit

Texas oilman split with MNC for second shot at Vista's ammo unit

JDH Capital, the private equity firm identified this week as the latest bidder for Vista Outdoor's ammunition unit, was part of the early consortium with MNC Capital that bid on the same business, Axios has learned.

Why it matters: JDH's solo return to the auction throws another wrench in this increasingly complex sale process.

Catch up quick: Days before shareholders were scheduled to vote on the $1.96 billion Czech deal, Vista said it received a slightly higher bid for the business. The company did not identify the bidder, but said it was previously involved in the sale process.

• Axios later confirmed the bidder was JDH, a PE firm run by Texas billionaire, Jeff Hildebrand.
• The firm offered to pay just over $2 billion for the ammo unit and, as part of its deal, said a $47.8 million break-up fee would be paid by the company to The Czechoslovakia Group (CSG).

Between the lines: Factoring the break-up fee, JDH is offering a premium of around 0.1%.

• The terms suggest Hildebrand feels he has leverage over the CSG deal, which continues to drag on with several shareholder votes postponed. It also gives him room to raise the offer, which he's done once already. Vista's merger agreement with CSG allows matching rights.
• According to sources familiar with the matter, JDH was originally paired with MNC Capital, an investment firm run by Mark Gottfredson, a former Vista board member. Vista's proxy said MNC launched its first bid to buy the ammo business back in September 2022.
• JDH has not responded to multiple requests for comment.

Flashback: Vista announced in October 2023 that it struck a deal to sell the ammo business to CSG for $1.9 billion.

• CSG beat out several bidders, including the MNC-JDH investor group that eventually disbanded. Vista has renamed the ammo unit, The Kinetic Group.
• MNC returned early this year with an offer on its own to buy the entire company — the ammo unit plus the outdoor gear business. MNC has raised its bid three times, with Vista rejecting each one, the latest being for just over $3 billion, or $39.50 per share (the stock traded around $35.84 on Friday).

The intrigue: Because CSG is a Czech company, its agreement with Vista is currently under review by the U.S. Committee on Foreign Investment (CFIUS), a Treasury Department division that can clear the deal or terminate it.

• Vista has said that it expects to get CFIUS approval and it continues to recommend shareholders approve the CSG deal. The company said it is obliged to engage with the new bidder as the proposal could lead to a superior transaction.
• The timing of a CFIUS a decision remains unclear, though its latest review period is set to end on June 26.

As a U.S. bidder, JDH faces no CFIUS review. A Vista filing revealed that JDH offered $1.91 billion for the ammo business earlier this month, and subsequently raised it to the current offer. The filing shows that the Kinetic Group CEO had dinner with a member of the JDH team the night before the bid became public.

What we're watching: Vista's board is in a bind. The existing deal is stuck in regulatory review, and the latest offer is a low-ball premium that will require more due diligence and time.

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