Roth MKM says Vista board unlikely to accept Colt CZ proposal

Roth MKM keeps a Neutral rating on Vista Outdoor after Colt CZ, a Czech Republic firearms manufacturer and 6% equity holder in Vista common stock, proposed an unsolicited strategic combination that claims to value Vista at $30 per share. The firm’s initial analysis of the CZ proposal suggests it is unlikely to be acceptable to the board and/or shareholders. CZ’s share contribution in the proposed merger seems arbitrary and the implied valuation that CZ is giving itself credit for does not seem realistic, the analyst tells investors in a research note. Roth says nothing in the CZ proposal addresses the fundamental issue that the ammo segment’s earnings power could be reset lower in the coming fiscal year, barring a significant election-year demand surge.