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2/3/2009
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The Moon, TX
US
Edited Date/Time
7/8/2022 9:02pm
https://sgbonline.com/vista-outdoor-to-acquire-fox-racing/
"Vista Outdoor, Inc. announced it had entered into a definitive agreement to acquire Irvine, CA.-based Fox Racing, the manufacturer of motocross, mountain bike and lifestyle-related gear, at a purchase price of $540 million, with the potential for an additional $50 million earnout based on the company’s financial performance.
Vista said Fox Racing, with its 50-year history, “aligns perfectly with Vista Outdoor’s existing portfolio of leading outdoor brands.”
Vista Outdoor’s product segments include CamelBak, Bell, Giro, Camp Chef, Bushnell, Bushnell Golf, Foresight Sports, Stone Glacier, and QuietKat.
Fox Racing grew net sales by a compound annual growth rate of approximately 20 percent from the calendar year 2019 to 2021 with expected growth above that in the calendar year 2022.
“Over the last four years, we have built a diversified portfolio of iconic outdoor brands led by a proven leadership team that continues to execute well and drive strong results for our shareholders,” said Chris Metz, Vista Outdoor CEO. “With the acquisition of Fox Racing, we are continuing the successful implementation of our strategy to use accretive acquisitions to expand our leadership position and ability to capitalize on long-term growth opportunities in outdoor recreation. The Fox Racing acquisition meets all of our financial and strategic acquisition criteria, even before taking into account potential benefits from 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 business to drive organic growth.
“Fox Racing is an ideal fit for our portfolio with a reputation for high-quality helmets, protective gear and apparel for motocross and mountain biking. Motocross and mountain biking are growing and familiar categories for Vista Outdoor. Fox Racing is synergistic with our existing action sports business unit, including Bell Helmets, Giro, Blackburn, Krash, Copilot, and Raskullz. The addition of Fox Racing to our portfolio will allow us to target multiple consumer demographics across mountain and road biking, skiing/snowboarding and powersports. We expect that Fox Racing and our legacy teams will find multiple opportunities to leverage core competencies, enhance supply chain efficiency and resiliency and better serve our customers and consumers to drive future growth. We believe the combined platform will make each business stronger and more profitable tomorrow than they are today while allowing us to continue delivering long-term returns for shareholders. Following our separation, previously announced on May 5, we expect to be one of the largest outdoor recreation companies in the industry,” concluded Metz.
Jeffrey McGuane, CEO, Fox Racing, will continue to lead the company following the close of the acquisition, as will all of Fox Racing’s leadership team.
“We’re excited to join the Vista Outdoor family,” McGuane said. “Together, we can leverage the heritage of our leading brands, enjoy new supply chain synergies, expand our deep and established channels and target an expanded customer base. Combined with enhanced access to capital for innovation and scale, we believe this transaction is a win-win for all involved. Vista Outdoor’s leadership team has proven they have an effective, repeatable acquisition model, making Vista Outdoor the clear acquirer of choice for Fox Racing. It is not often that an acquired company can remain true to its culture and customer base while also tapping into the benefits of Vista Outdoor’s Centers of Excellence, vast retail partnerships, innovation engines and a leadership team that enables a founder’s mentality and results-driven culture.”
Fox Racing will be part of Vista Outdoor’s Outdoor Products segment and included in its Outdoor Products Company at the completion of the previously announced separation.
Altamont Capital Partners own Fox Racing. Altamont originally invested in Fox via majority recapitalization in 2014.
In a separate statement, Altamont Capital Partners Co-Founder and Managing Director Keoni Schwartz said, “Altamont has been proud to partner with the Fox Racing team to build upon the legacy and leadership of the brand. Altamont believes in making purposeful, long-term investments that allow us to build strong businesses through collaborative work with our partners. We are grateful for the leadership of CEO Jeff McGuane and the efforts of the entire Fox Racing family. We are proud of what we accomplished together during our partnership.”
Vista Outdoor agreed to pay a gross purchase price of $540 million, subject to certain customary closing adjustments and not including contingent incentives of up to $50 million, upon achieving certain EBITDA targets.
For the calendar year 2022, Fox Racing’s full-year net sales and adjusted EBITDA are expected to be roughly $350 million and $55 million, respectively. Vista Outdoor expects the transaction to be immediately accretive to earnings, excluding transaction costs, transition costs, and inventory step-up.
Vista Outdoor expects to finance the acquisition through a $600 million asset-based revolving credit facility, which will replace its existing asset-based revolving credit facility and a $350 million secured term loan facility.
Vista expects to close the transaction in the second fiscal quarter of FY 2023 subject to the 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, within the target leverage ratio of one to two times.
Vista will provide updated fiscal 2023 guidance when it reports the first quarter of fiscal 2023 earnings on July 28, which is in line with 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 served as financial advisor, and Reed Smith LLP served as legal advisor to Vista Outdoor. JPMorgan Chase Bank, N.A. has also provided financing advice to Vista Outdoor with Capital One, N.A., acting as joint lead arrangers and bookrunners. Cravath, Swaine & Moore LLP served as legal advisor to Vista Outdoor in connection with transaction financing."
For the calendar year 2022, Fox Racing’s full-year net sales and adjusted EBITDA are expected to be roughly $350 million and $55 million, respectively.
I believe it was said on Pulp by someone other than Steve that RC had equity/ownership in Fox. I hope he made a fortune off this deal.
The Shop
It's a saturated and crowded market with newer and hotter upstart brands.
My sense is that a lot more people ride MTB's (and buy gear) than MX. You focus on the larger market not the one you love.
Pit Row
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