Vista Outdoor Inc. (VSTO), a manufacturer of outdoor sports and recreation products, announced Wednesday that it has entered into a definitive agreement to acquire Irvine, California-based Fox Racing for $540 million.
The deal also has the potential for an additional $50 million earnout based on Fox Racing’s financial performance, achieving certain EBITDA targets.
Fox Racing provides performance motocross, mountain bike and lifestyle gear for adventure seekers. The company grew net sales by a compound annual growth rate of around 20 percent from calendar year 2019 to 2021 and is expected to grow in excess of that in calendar year 2022.
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 to finance the acquisition through a combination of a $600 million asset-based revolving credit facility, which will replace Vista Outdoor’s existing asset-based revolving credit facility, and a $350 million secured term loan facility.
Vista Outdoor expects to close the deal in the second fiscal quarter of FY 2023, subject to the receipt of regulatory approvals and other customary closing conditions.
Fox Racing will be part of Vista Outdoor’s Outdoor Products segment and will be included in the new Outdoor Products Company upon the completion of the previously announced separation.
Jeffrey McGuane, CEO of Fox Racing, will continue to lead the company following the closing of the acquisition, as will all of Fox Racing’s leadership team.
Chris Metz, Vista Outdoor CEO, said, “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.”
Vista Outdoor plans to report its first quarter fiscal year 2023 financial results on July 28. The company expects to discuss its outlook and financial guidance and may discuss matters of strategy during the earnings conference call.
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