Vista Outdoor to Purchase Fox Racing for $540 Million
The motocross and mountain biking gear company is to become the 40th brand under the Vista Outdoor banner
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Vista Outdoor Inc. (NYSE: VSTO) has entered into an agreement to purchase Fox Racing for $540 million with the potential for an additional $50 million earnout based on Fox Racing’s financial performance, both companies jointly announced Wednesday. The purchase brings Fox Racing into Vista Outdoor Inc.’s stable of now 40 outdoor and shooting sport brands that include Camp Chef, CamelBak, Blackburn, Bushnell, and Remington.
Publicly traded Vista Outdoor Inc. reported $3.04 billion in revenue for fiscal year 2022, a growth of 36.8 percent over fiscal year 2021.
“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,” said Chris Metz, Vista Outdoor CEO, in a press release. “Motocross and mountain biking are growing and familiar categories for Vista Outdoor. Fox Racing is synergistic to our existing action sports business unit, which includes 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.”
Metz further said the acquisition of Fox Racing continues “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.”
Fox Racing was started by Santa Clara University physicist Dr. Geoff Fox in 1974 and is known as an industry leader in protective gear, apparel and accessories for motocross and mountain biking. Fox Racing grew its net sales by a compound annual growth rate of approximately 20 percent from 2019 to 2021, and is expected to top that growth for 2022. (Fox Racing Shox under Fox Factory Holding Corp. is a separate company started by Geoff’s brother, Bob Fox, in 1978 and is not part of the sale.)
Jeffrey McGuane, the 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.
“We’re excited to join the Vista Outdoor family,” McGuane said in a press release. “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. 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. Needless to say, we are thrilled about this next chapter for Fox Racing.”
Fox Racing will be included in the new Outdoor Products company formed when Vista Outdoor splits into two separate businesses next year, a move it announced in May.
For the 2022 calendar year, Fox Racing’s full-year net sales and adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) 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 inventory step-up.
Vista also reported today that it expects to finance the Fox Racing 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 expects to close the transaction in the second fiscal quarter of 2023, subject to the receipt of regulatory approvals and other closing conditions.