A year-and-a-half-long, tense process aimed at purchasing a division of The Kinetic Group has ended successfully for the Czechoslovak Group (CSG), despite numerous delays and pressures from various parties. At yesterday's Annual General Meeting (AGM), shareholders of Vista Outdoor, the parent company of The Kinetic Group, approved a deal in which CSG will pay $2.225 billion for the prestigious U.S. ammunition company. Additionally, investment company Strategic Value Partners (SVP) will acquire the Revelyst division, an outdoor equipment manufacturer, for $1.125 billion. This marks a historic Czech investment in the U.S. with significant security and political implications.

"I'm proud of the strong quarter that the Vista Outdoor team delivered as we approach the split. With respect to the separation, the Board of Directors went through a thorough and competitive process that involved nearly three years of reviewing a range of strategic and other alternatives to maximize shareholder value," said Mike Callahan, Chairman of Vista Outdoor, in early November. He continued: "At the conclusion of our review, the Board determined that the transactions with CSG and SVP (Strategic Value Partners, ed.) together maximize value for Vista Outdoor shareholders. Based on our management team's current estimates, the transactions with CSG and SVP will deliver an estimated value of $45.00 per Vista Outdoor common share. We are pleased that ISS is recommending that Vista Outdoor shareholders vote in favor of the sale of The Kinetic Group to CSG and recognizes the significant value that the CSG and SVP transactions will bring to shareholders. The Board continues to recommend that Vista Outdoor shareholders vote in favor of the proposal to adopt the CSG merger agreement at the special meeting of shareholders on 25 November 2024."

And as they said, so they did. After multiple postponements of the extraordinary shareholders' meeting and many months of wrangling with MNC Capital, the investment group that presented Vista Outdoor with an unsolicited offer to buy both of its divisions, the shareholders decided in favour of the Czech group CSG. This decision makes CSG a key player in the US and global ammunition market.

Thanks to the acquisition, the current portfolio of ammunition manufacturers under the CSG Ammo+ division expands by other prestigious brands such as Remington, Federal or CCI Ammunition. It should be recalled that CSG Ammo+ has previously acquired leading Italian manufacturer Fiocchi Munizioni, which produces ammunition for hunting, sport and security forces, Baschieri & Pellagri, which designs, develops and manufactures gunpowder, cartridges, biodegradable components and premium shotgun cartridges, and British shotgun manufacturer Lyalvale Express. Through Fiocchi of America, CSG has been in the US market for over a year.

The transaction was preceded by a very rigorous review by the Committee on Foreign Investment in the United States (CFIUS), which gave its final approval for the sale of The Kinetic Group to CSG in late June. This clearly refuted the claims made by some Republican politicians about the Czech group, which blamed it for unspecified links to Russia and China and described it as a potential security threat to US security. The most visible critic was Senator JD Vance, the future US vice-president, who even exchanged open letters with CSG owner Michal Strnad.

It will now be up to Czechoslovak Group, with its approach to this huge investment, not only by Czech standards, to convince its earlier critics that it can develop the business of The Kinetic Group in a way that will fully satisfy the needs of the US security services. The CSG expressed its position and response to the objection that American ammunition producers should remain in American hands as follows: „We are of the opinion that a company like ours, an expert trader and manufacturer of defence and small arms ammunition based in a NATO country, a US ally, which holds and develops companies for the long term and not for financial speculation, is the right owner to minimise any risk to American customers, whether in the civilian or police segment. We will bring the stability and additional investment that U.S. small caliber ammunition manufacturers currently need."

In response to JD Vance's objections in April this year, CSG owner Michal Strnad wrote, among other things: „CSG is one of the most significant private supporters of Ukraine, a country to which we have been supplying much needed weapons systems since 2018, long before the outbreak of open Russian aggression. Since the Russian army attacked Ukraine, we have supplied the Ukrainian army, with the help of the Czech government and other NATO countries including the US, with over 100 pieces of heavy equipment and, most importantly, hundreds of thousands of pieces of artillery ammunition, for which we are one of the most important European manufacturers (...) CSG companies are also suppliers to the US military and have a strong history of cooperation with major corporations in the US defence industry. In view of the above, any speculation about CSG's links to the Putin regime should be considered nonsense. We specifically state, however, that CSG has never had any ties to the Putin regime and there is no reason why we should have such ties, given that we have never supplied any defense products to Russia."

The incoming vice president did not respond favorably, but, that said, the key decision of the CFIUS committee was made and it was clear. In late October, Czechoslovak Group CEO David Chour said of the whole lengthy process: „I jokingly say sometimes that I leave work on Friday and we buy and I come in on Monday and we don't buy. It's a transaction that took a year and a half. But I believe it is heading towards a successful conclusion and sometime in the first half of December we will be able to complete it and convince shareholders." The target was reached a few days earlier. For CSG, among other things, this marks the end of a long period that tied its hands in some respects: for many months it had to hold onto funds earmarked for acquisition, which, if the process was not successfully completed, would have resulted in a net loss.

After the acquisition of the iconic Colt brand by the Czech Colt CZ Group SE (a $220 million investment in 2021), this is another major Czech investment in defence and security technology in the United States, and one that is ten times more significant in terms of volume and context, and an extraordinary achievement for CSG and, in a way, for the Czech Republic.