Vista Outdoor, the parent company of 40 brands that design, manufacture and market sporting and outdoor products to consumers around the globe, closed its acquisition of CA-based Fox Racing for the purchase price of $540 million, with the potential for an additional $50 million earnout based on Fox Racing’s financial performance. The addition of Fox Racing, a global icon in performance motocross, mountain bike and lifestyle gear for adventure seekers, allows Vista Outdoor to add yet another brand to its portfolio while maintaining a strong balance sheet and reinvesting in its existing business to drive organic growth.
According to an 8K filed with the SEC, Capital One is the administrative agent for the revolver and JPMorgan Chase is the administrative agent for the term loan.
Vista Outdoor financed this 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’s leverage ratio remains well within the target leverage ratio of one to two times.
“We are excited to welcome Fox Racing to the Vista Outdoor family,” Chris Metz, CEO of Vista Outdoor, said. “This legendary brand brings us into one of the most passionate sporting bases with motocross and expands our footprint in mountain biking. 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. With the Fox Racing acquisition now closed, and the planned acquisition of Simms Fishing Products announced, we’re continuing the successful implementation of our strategy to use accretive acquisitions to expand leadership positions across categories, while enhancing our ability to capitalize on long-term growth opportunities in outdoor recreation.”
For 50 years, Fox Racing has been a voice in the motocross and adventure community, with a dedicated consumer following and talented group of employees that embody the brand’s mission to “honor yesterday, conquer today and invent tomorrow.” Fox Racing’s deep history of producing innovative gear that enables racers and explorers to reach new heights aligns perfectly with Vista Outdoor’s existing portfolio of outdoor brands. Fox Racing grew net sales by a compound annual growth rate of approximately 20% from calendar year 2019 to 2021 and is expected to grow another roughly 20% in calendar year 2022.
Jeffrey McGuane, CEO of Fox Racing, continues to lead the brand along with current members of Fox Racing’s leadership team. Fox Racing is now part of Vista Outdoor’s Outdoor Products segment and will be included in the new outdoor products company upon completion of the separation.
Vista Outdoor paid a gross purchase price of $540 million, subject to certain customary closing adjustments and not including contingent incentives of up to $50 million, upon the achievement of certain EBITDA targets. 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 the transaction to be immediately accretive to earnings, excluding transaction costs, transition costs and inventory step-up.