Finally, A Vista Deal and Some Suggestions for the NRA From the New York Attorney General

Two stories that have managed to stay alive far longer than anyone expected are the sale of Vista Outdoor and the year-long New York court battles between the National Rifle Association and the New York Attorney General’s office. Some clarity may be ahead on both.

On Friday, Vista issued a release announcing their having reached a “definitive agreement with funds managed by Strategic Value Partners, LLC, and its affiliates” that would “sell Revelyst in an all-cash transaction based on an enterprise value of $1.125 billion dollars.”

The deal, however, is based on a separate transaction that (finally) sells the Kinetic Group (Vista’s ammunition businesses) to Czechoslovak Group (CSG) for an increased purchase price of $2.25 billion. In short, Vista Outdoor will be sold to two different buyers via two separate transactions for a combined $3.35 billion dollars. That shakes out to $45 per share of Vista stock, a significant bump over the current share price.

According to Vista Board Chairman Michael Callahan,

The Board engaged in a thorough process to identify the best avenues to unlock value – and through these two separate, but contingent, transactions with SVP and CSG, we have identified a path that reflects the true strength and potential of both Revelyst and The Kinetic Group.

However you phrase it, the Vista board parlayed proposals, counter-proposals, and interested parties against each other into significant additional dollars for its shareholders.

According to Vista, the SVP transaction is expected to close in January 2025, subject to the completion of the CSG transaction. Having already received all necessary governmental approvals, the CSG acquisition of the Kinetic business should be completed before the end of this year.

It’s worth noting that shareholder approval is still necessary, but it’s not likely that owners of a stock that closed at $39.85/share on Friday would turn down transactions that will net them $45/share. That also requires overlooking that on at least two other occasions, the deal looked done.

The very complicated deal announced Friday should end the semi-hostile acquisition efforts of former Vista Board member Mark Gottfredson and MNC Capital as it this deal improves on what MNC said was its “final” $43/share offer.

The CSG acquisition was approved by the Committee on Foreign Investment in the United States (CFIUS) in June, but the offers and counteroffers from CSG/MNC continued to delay the process. Ultimately, it appears a final $75 million bump in the CSG offer realized what Vista’s financial advisors felt was the best deal they could strike.

Vista shareholders have, at times, been confused by the tit-for-tat battle, but they have realized a nearly 35% gain in shareholder value since the first of the year. Now they stand to gain additional dollars in the two deals. Remember, however, that deals aren’t done until they’re done. We’ll keep watching.

As far as the National Rifle Association’s battle with the New York Attorney General goes, well, they’re still battling. In the latest skirmish, New York Attorney General Letitia James has filed a “Plaintiffs Memorandum of Law in Support of Final Judgement.”

Essentially, the 28-page document is a. wish list of requirements the AG believes is essential to achieve real reform at the NRA. New York lost the battle to have the organization disbanded, and a subsequent motion to appoint a receiver was also denied.

Now, the AG’s office appears to have moved from its decidedly adversarial role to one looking to “ensure that the NRA doesn’t repeat the misconduct that led a jury and this Court to determine the NRA has failed its members for decades.”

Key to the remedies is a detailed set of suggestions designed to force entrenched members of the “old guard” from positions of leadership, put real and verifiable controls into place to protect both the business practices and reform-minded employees and board members, and — most importantly — force the actions of the board and all its myriad committees into the open for membership scrutiny.

The motivation is explained simply . . .

Many of the same NRA directors who failed in their duty to oversee the NRA during an era of “ill-considered,” “wasteful,” and “disastrous” efforts to “avoid accountability” continue to serve on the Board today.

“Indeed, even after the Court issued the Order,” it AG’s filing reads, “the NRA told its members and directors that ‘there was no evidence the NRA Board of Directors condoned the violations in question; instead, the board acted when it became aware of deviations from its own controls.’”

Consequently, the AG asserts that a “sharp break with the past” is needed to assure that NRA 2.0 arrives quickly and decisively.

While the entrenched board members and their supporters will disagree, these suggestions seem more like essential steps needed to return the NRA to a well-run member organization that an attack designed to handicap an organization the Attorney General admits she dislikes intensely.

They would both accelerate essential restructuring of the board and facilitate “transparency, accountability, and professionalism; removing obstacles impending the election of reform-minded leaders.”

One of the suggestions is the opening of the next three election cycles to mandate no more than 25 incumbents and 25 candidates from the membership that meet the criteria of service under Article VIII, Section 2(a) of the NRA’s bylaws regardless of any other criteria. That change would eliminate the requirement that candidates would no longer be forced to “rally for hundreds or thousands of signatures.”

Another item on the AG’s wish list would prohibit “certain directors” from being on the NRA’s Audit, Bylaws and Resolutions, Ethics, Finance, and Legal Affairs committees. The filing lists board members Curtis Jenkins, Charles Cotton, David Coy, Joel Friedman, and Sandra Froman as specific examples of “entrenchment” in areas where their failures were both demonstrated and proven in the jury trial.

There are lots of other suggestions, including the dissolution of the NRA’s Special Litigation Committee. That’s a move that would get plenty of Board support. Dissolution of that group, referred to as the “Brewer employment assurance committee” by some NRA reformers, was approved by a majority of Board members at its last meeting, but rejected under Robert’s Rules of Order.

Robert’s stipulates a supermajority in order to be accomplished. The NYAG’s office points out that under New York law, that Roberts stipulation is not only improper, but against the law. Since the Special Litigation Committee played what the AG’s office says was a “central role in the NRA’s ‘ill-considered,’ ‘wasteful,’ and ‘disastrous decision to pursue bankruptcy to avoid accountability’ the AG says it should be dissolved.

The AG’s filing points out a longstanding tactic employed by board loyalists: “parliamentary tactics used by NRA leadership to quash dissent and avoid accountability.”

“Notwithstanding Robert’s Rules, given the elimination of any conflicts warranting the continuation of the SLC, and to inhibit the SLC’s continued lack of accountability to the full Board, the Court should give effect to the will of the majority of the NRA’s active directors and dissolve the SLC.”

There are pages of observations, suggestions, and rationale for them, but reading through them, it seems that the Attorney General’s office, having failed in its efforts to disband or assume control of the NRA’s operations, is determined to see real, tangible, and verifiable reforms put into place.

That’s a hard position to argue against. Nevertheless, some will.

As always, we’ll keep you posted.