Vista Outdoor Reaches Definitive Agreement to Acquire Fox Racing
Press release | July 6, 2022
Fox Racing complements Vista Outdoor’s existing brand portfolio and expands its leadership positions in motocross and mountain bike helmets, protective gear and apparel
Acquisition strengthens outdoor segment and adds approximately $350 million in revenue
This is a press release from Vista Outdoor
Anoka, MN (July 6, 2022) – Vista Outdoor Inc., the parent company of 39 renowned brands that design, manufacture and market athletic and outdoor products to consumers around the world, today announced that it has entered into a definitive agreement to acquire Irvine, Calif.-based Fox Racing, a global icon in performance motocross, ATV and lifestyle gear for adventure enthusiasts. The purchase price is $540 million, with a potential earnout of $50 million depending on Fox Racing’s financial performance.
For 50 years, Fox Racing has been a leading voice in the motocross and adventure community, with a dedicated following and talented group of employees who embody the brand’s mission to “honor yesterday, conquer today”. today and to invent tomorrow”. Fox Racing’s deep history of producing innovative gear that takes racers and explorers to new heights aligns perfectly with Vista Outdoor’s existing portfolio of leading outdoor brands. Fox Racing grew its net sales by a compound annual growth rate of approximately 20% from calendar year 2019 to 2021 and is expected to grow beyond that in calendar year 2022.
“Over the past four years, we have built a diverse portfolio of iconic outdoor brands led by a proven management team that continues to execute well and deliver strong results for our shareholders,” said Chris Metz, CEO of Vista Outdoor. “With the acquisition of Fox Racing, we continue the successful execution of our strategy of using accretive acquisitions to expand our leadership position and our ability to capitalize on long-term growth opportunities in outdoor recreation. . The acquisition of Fox Racing meets all of our financial and strategic acquisition criteria, even before considering the potential benefits of combining Fox Racing with our existing business. I am pleased that we have been able to continue to add category-leading brands like Fox Racing to our portfolio while maintaining a strong balance sheet and reinvesting in our existing businesses to drive organic growth.
“Fox Racing is an ideal addition to our portfolio with a reputation for high-quality motocross and ATV helmets, protective gear and apparel. Motocross and ATV are growing and familiar categories for Vista Outdoor. Fox Racing synergizes with our existing action sports business unit, which includes Bell Helmets, Giro, Blackburn, Krash, Copilot and Raskullz.Adding Fox Racing to our portfolio will allow us to target multiple consumer demographics in the areas of mountain and road biking, ski/snowboarding and motorsports.We anticipate that Fox Racing and our legacy teams will find multiple opportunities to leverage core skills, improve efficiency and resiliency across the chain. sourcing and better serve our customers and consumers to drive future growth. We believe the combined platform will make every business stronger and more profitable tomorrow than it is today, while allowing us to continue to deliver long-term returns to shareholders. Following our separation, announced on May 5, we plan to be one of the largest outdoor recreation companies in the industry,” Metz concluded.
Jeffrey McGuane, CEO of Fox Racing, will continue to lead the company after the acquisition closes, as will the entire Fox Racing management team.
“We are thrilled to join the Vista Outdoor family,” said McGuane. “Together, we can leverage the heritage of our leading brands, take advantage of new supply chain synergies, extend our deep and established channels and target a broader customer base. Combined with greater access to capital for innovation and scale, we believe this transaction is a win-win situation for all parties involved Vista Outdoor’s management team has proven to have an effective and repeatable acquisition model, making Vista Outdoor the acquirer of choice for Fox Racing Rarely can an acquired business be able to remain true to its culture and customer base, while enjoying the benefits of Vista Outdoor’s Centers of Excellence, extensive retail partnerships, of innovation drivers and a management team that enables a founder’s mindset and results culture.Needless to say, we’re excited about this new chapter for Fox Racing.
Fox Racing will become part of Vista Outdoor’s outdoor products segment and will be included in the new outdoor products company once the previously announced separation is complete.
Details of the proposed transaction
Vista Outdoor has agreed to pay a gross purchase price of $540 million, subject to certain customary closing adjustments and excluding conditional incentives of up to $50 million, upon achievement of certain EBITDA targets. For calendar year 2022, Fox Racing’s full-year net sales and adjusted EBITDA are expected to be approximately $350 million and $55 million, respectively. Vista Outdoor expects the transaction to be immediately accretive to earnings, excluding transaction costs, transition costs and increased inventory.
Vista Outdoor plans to finance this acquisition through a combination of increased capacity and drawdowns under its existing asset-based revolving credit facility and a new $350 million secured term loan. Vista Outdoor expects to close the transaction in the second quarter of fiscal year 2023, subject to receipt of regulatory approvals and other customary closing conditions. Following the closing of this transaction, Vista Outdoor’s leverage ratio is expected to be below 1.5 times, well below the target leverage ratio of one to two times.
Vista Outdoor will provide updated guidance for fiscal 2023 when it releases first quarter fiscal 2023 results on July 28, 2022, which is consistent with the historical cadence.
Robert W. Baird & Co. served as financial advisor and Ropes & Gray LLP served as legal advisor to Fox Racing.
Morgan Stanley & Co. LLC acted as financial advisor and Reed Smith LLP acted as legal advisor to Vista Outdoor in connection with the transaction. JP Morgan Securities LLC is also providing financing advice to Vista Outdoor and acting as lead arranger and joint bookrunner and Cravath, Swaine & Moore LLP acted as legal counsel to Vista Outdoor in connection with the financing of the transaction.
For more information on Fox Racing and the definitive agreement, please view the Fox Racing Acquisition Presentation by clicking here, and the Fox Racing Acquisition Infographic by clicking here.
Vista Outdoor expects to release its first quarter fiscal 2023 financial results on Thursday, July 28, 2022 at 5:00 a.m. EDT. In addition to the results, which will be posted on Vista Outdoor’s website, the company plans to discuss its outlook and financial direction and may discuss strategy matters during the earnings conference call to be held at 9:00 a.m. EDT. .
Please refer to our press release titled “Vista Outdoor to Report First Quarter Fiscal 2023 Financial Results” for earnings webcast and replay information.
For more information about Vista Outdoor, visit www.vistaoutdoor.com.