Vista Outdoor has agreed to pay a gross purchase price of $540 million for Fox Racing, 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.
Vista Outdoor expects to finance 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 expects to close the transaction in the second fiscal quarter of FY 2023, subject to the receipt of regulatory approvals and other customary closing conditions. Following the closing of this transaction, Vista Outdoor's leverage ratio is expected to be below 1.5 times, well within the target leverage ratio of one to two times.
We spoke with Fox Racing CEO Jeff McGuane at the beginning of the pandemic… even then you could see there was an eye on the prize. "The investment in talent and culture is job #1 as we set our sights on the future of Fox,” said McGuane on his 1-year anniversary with Fox Racing. “Our promise to deliver the most inspired experiences begins with building the most inspired team." Fox has always been driven to make the best products available, and to make great products, you need a great team. "I am extremely confident in our team and excited about what we have in the works, right now and for the future. The experience and vision they have will propel us into the next chapter of Fox,” he predicted.
