Friday, 02 September 2016 09:15 AM
Company Update
LONDON, UK / ACCESSWIRE / September 2, 2016 / Active Wall St. blog coverage looks at the headline from Vista Outdoor Inc. (NYSE: VSTO) as the company makes a strategic move to strengthen its position in the camping market with the announcement to acquire Camp Chef on September 1, 2016 for $74 million. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.
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Vista Outdoor is a global designer, manufacturer, and marketer of consumer products for the outdoor sports and recreation markets. The company operates in two segments: Shooting Sports and Outdoor Products.
Logan, Utah-based Camp Chef is a privately owned company which was founded in 1990. It manufacturers high quality outdoor cooking solutions with more than 250 products including camp stoves, barbecue grills, pellet grills, smokers, fire pits, and a full line of cast-iron cookware and accessories.
Details of the Transaction
Vista Outdoor will pay Camp Chef a total of $74 million, of which $ 60 million will be paid in cash on finalization and the balance of $14 million are to be paid annually in three equal instalments on the first, second, and third anniversaries of the deal finalization date. Once the deal is final Camp Chef shall be integrated into the Outdoor products division of Vista Outdoor. Vista Outdoor expects the acquisition to be slightly accretive to FY17 earnings per share (EPS). Vista Outdoor will utilise borrowings under its existing revolving credit facility to finance this deal.
Commenting on the deal Ty Measom, Camp Chef President said:
"Camp Chef is excited to join the exceptional family of Vista Outdoor brands. The opportunity to be part of this dynamic company will provide for the future growth and success of Camp Chef as a leader in our market."
Vista Outdoor's Chairman and Chief Executive Officer Mark DeYoung commented:
"The Camp Chef transaction aligns with Vista Outdoor's strategy to deliver long-term value through acquiring complementary, market-leading brands that will benefit from Vista Outdoor's balance sheet, distribution network, and sales and marketing expertise."
How Vista Outdoor benefits from this deal
Vista Outdoor will be able to strengthen its market position as a one stop solution for all outdoor and recreational activities. Camp Chef is known for its strong product development and user friendly products, and these will complement Vista Outdoor existing product range. The deal is also financially lucrative due to lower purchase price which is a 6.4x expected EBITDA of Camp Chef for calendar year 2016. Due to deferred payments of $14 million, the transaction also has inherent tax benefits for Vista Outdoor.
On fast track to growth
Vista Outdoor has been making strategic moves to strengthen its business divisions. A couple of days before this deal, Vista Outdoor had announced on August 30, 2016 that it plans to expand its ammunition manufacturing capacity in Lewiston with an investment of $99.3 million and by creating 137 new jobs, including engineers, program managers, technicians, and manufacturing employees. It also announced changes in the leadership of its Outdoor Products division and Sports Protection with appointment of new Vice Presidents.
Market reaction
At the close of the trading session on September 1, 2016, Vista Outdoor's shares were marginally up by 0.08%, ending the day at $39.85. A total volume of 316,987 shares was traded during the day. The company's stock price has gained 1.68% in the past one week.
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