Vista Outdoor rejects MNC's buyout offer, agrees to CSG's sweetened bid for unit

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(Reuters) -Vista Outdoor on Monday rejected investment firm MNC Capital's final buyout offer of $3.2 billion, citing that it undervalued the company, and said it had agreed to an increased bid for its ammunition unit from Czechoslovak Group (CSG).

The latest development adds to the months-long saga for the parent of Federal Ammunition and Remington Ammunition against the backdrop of rising demand for military supplies since the escalation of the Russia-Ukraine conflict in 2022.

MNC Capital, whose previous bids were all rejected by Vista in favor of its plan to separate its businesses, had increased its offer to $42 per share from $39.50 late last month.

But Vista said MNC Capital's offer would not be more favorable to its shareholders than a deal with CSG for its ammunition unit, Kinetic Group.

"Vista Outdoor engaged extensively with MNC Capital since MNC's initial outreach in September 2022 ... Despite these efforts, MNC's final indication significantly undervalues Vista Outdoor as a whole and especially the Revelyst (performance gear) business," the company said in a statement.

MNC Capital did not immediately respond to a Reuters request for a comment.

Prague-based defense firm CSG raised the purchase price for the proposed deal to buy Kinetic Group by $100 million to $2.1 billion, Vista said.

On closing of the CSG deal, Vista stockholders would receive one share of Revelyst common stock and $21.00 in cash, up from $18 offered in June.

Vista now expects the deal with CSG to close this month, subject to approval from stockholders at a special meeting scheduled to be held virtually on July 23.

Institutional Shareholder Services had in June recommended that Vista shareholders abstain from voting on a proposed merger during the special meeting and should hold out for a better deal for the entire company.

Kinetic Group's sale to CSG has received regulatory approval from an interagency committee of the U.S. government.

(Reporting by Juveria Tabassum; Editing by Shilpi Majumdar)