Vista Outdoor Agrees to Buy Fox Racing for $540M

Vista Outdoor Inc. announced today that it will acquire clothing and lifestyle brand Fox Racing for $540 million, with the possibility of another $50 million earnout based on the brand’s achievement of financial targets.

The deal is expected to close in the second quarter of 2023, and current Fox CEO Jeffrey McGuane is expected to lead the company through the acquisition alongside the rest of the existing leadership within the California-based brand, which specializes in clothing and protective gear for mountain biking and motorsports.

Fox Racing says it grew net sales by a compound annual growth rate of roughly 20% from 2019 to 2021, and it expects to exceed that growth in calendar year 2022. The company expects an annual net sales and adjusted EBITDA of about $350 million and $55 million, respectively, for the 2022 calendar year.

The purchase will be financed using a combination of Vista Outdoor’s existing asset-based revolving credit facility and a new $350 million secured term loan.

Vista Outdoor currently owns 39 brands throughout the outdoor industry including Giro, Blackburn, QuietKat, and a number of shooting brands. Earlier this year, the company announced plans to split into two distinct companies to separate its shooting and non-shooting categories. In that announcement, Vista Outdoors said it would redistribute stock from its non-shooting so-called Outdoor Products brand to shareholders in 2023 as the company moves into its next phase.

In the release, the company did not mention the controversy that surrounded it in 2018, when the outdoor industry reckoned with its relationship to gun violence and several major retailers boycotted the company.

Still, like the rest of the outdoor industry, Vista Outdoor has grown substantially in the last few years and in the 2021 fiscal year reported a 37% sales growth.

bigquotes
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. 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.”Vista Outdoor CEO Chris Metz

bigquotes We’re excited to join the Vista Outdoor family. 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. Needless to say, we are thrilled about this next chapter for Fox Racing.Fox Racing CEO Jeffrey McGuane

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