Fox Racing Sells for $540 Million

Vista Outdoor Inc. announced the acquisition Wednesday. Fox Racing joins Giro, Bell, and CamelBak under the group’s expanding brand umbrella.

The two companies said Wednesday that Fox Racing will now function as a Vista Outdoor asset. Vista confirmed in a statement that it purchased the Irvine, Calif.-based company for $540 million. The agreement comes with another potential $50 million in earnouts that Vista may have to pay Fox based on its financial performance.

Founded in 1974, Fox Racing‘s motocross and mountain biking accessories and branded apparel have grown increasingly popular. The company reported a 20% compound annual net sales growth rate each year from 2019 to 2021. It expected this year’s growth to surpass those numbers.

It’s the latest high-profile acquisition for Vista Outdoor Inc., which adds the Fox banner to its existing portfolio including Giro, Bell Helmets, CamelBak, and a host of hunting brands.

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“Fox Racing is an ideal fit for our portfolio with a reputation for high-quality helmets, protective gear, and apparel for motocross and mountain biking,” Vista Outdoor CEO Chris Metz said, adding the categories are “growing and familiar” for the company.

“Fox Racing is synergistic with our existing action sports business unit, including Bell Helmets, Giro, Blackburn, Krash, Copilot, and Raskullz.”

Metz concluded that “[t]he addition of Fox Racing to our portfolio will allow us to target multiple consumer demographics across mountain and road biking, skiing/snowboarding, and powersports.”

Outlook for Fox Racing

The outlook for Fox Racing looks familiar in the course of corporate acquisitions. Metz’s further comments indicated oncoming consolidation.

“We expect that Fox Racing and our legacy teams will find multiple opportunities to leverage core competencies, enhance supply chain efficiency and resiliency, and better serve our customers and consumers to drive future growth,” he said. “Following [Vista’s bisection into two companies] previously announced on May 5, we expect to be one of the largest outdoor recreation companies in the industry.”

Vista will retain Fox Racing’s current leadership team, spearheaded by CEO Jeffrey McGuane.

“We’re excited to join the Vista Outdoor family,” McGuane said. He echoed Metz’s positive take on Fox’s synergy with Vista’s portfolio and added, “[With] enhanced access to capital for innovation and scale, we believe this transaction is a win-win for all involved.”

He concluded by acknowledging that acquired companies often don’t retain their established identity. But he remains hopeful that Vista Outdoor’s team can help Fox stay on track.

Metz said, “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.”

Fox Racing will become part of Vista Outdoor’s “Outdoor Products” segment as soon as the May 5 separation becomes final.

 

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Financials

For the calendar year 2022, Fox Racing expects to tally full-year net sales of $350 million. Its adjusted EBITDA (a measure of a company’s overall earnings performance) figures to be around $55 million. Vista expects to close the transaction in the second quarter of the fiscal year 2023. It must complete various regulatory approvals and other customary closing conditions first.

Vista Outdoor expects to finance the purchase through a $600 million asset-based revolving credit facility. Excluding transaction and transition costs, plus costs associated with inventory step-up, it expects the acquisition to start growing its earnings immediately.

Altamont Capital Partners previously owned Fox Racing after a 2014 major recapitalization. Fox Factory, which builds Fox-branded suspension parts, is a separate entity and thus not part of the acquisition.