(Reuters) -U.S. sporting and outdoor products group Vista Outdoor (NYSE:VSTO)'s has rejected a cash-and-stock merger offer from Czech gunmaker Colt CZ Group, saying it undervalued the company and was not better for shareholders than a rival bid.
Vista's board said in a company filing on Wednesday evening that it maintained its recommendation to sell its sporting products division to the Czechoslovak Group (CSG), in a $1.91 billion deal announced in October.
Colt CZ made its offer to Vista last week, proposing to keep the U.S. company whole and valuing its shares at a 16% premium.
"The Board of Directors has determined that the (Colt CZ proposal) would not be more favourable to Vista stockholders from a financial point of view than the transactions contemplated by the CSG (agreement) and does not provide a basis for engagement with Colt CZ," Vista Chief Executive Gary McArthur said in a letter posted on the company's website.
"The Board of Directors is therefore rejecting the (proposal)."
Vista said Colt CZ's offer did not take into account the value created by splitting the outdoor and sporting divisions, and the valuation of $30 a share in the proposal undervalued the company.
Colt CZ declined to comment.
"We do not comment on pending or contemplated transactions," its spokesperson said in an emailed reply to Reuters questions.
Vista shares have climbed 8.3% since Colt CZ's offer but are down almost 15% since the deal with CSG was announced on Oct. 16, when Vista also cut its full-year sales forecast. The shares closed Wednesday at $27.89.
Prague-listed Colt CZ shares were down nearly 1% by mid-morning on Thursday and have dropped nearly 3% since its proposal to Vista.
Analysts at Erste Bank's Ceska Sporitelna unit said Colt CZ may look to improve its offer slightly, while the rejection by the board was not surprising.
Vista said CSG's acquisition of the sporting products division should close in 2024 pending shareholder and regulatory approvals.
"From the outset, we have believed that, compared to Colt's offer, our agreement with Vista makes much more sense for Vista shareholders and for the future success of both (Vista) segments," CSG said in a statement.
($1 = 22.1330 Czech crowns)