Defence and heavy industry conglomerate Czechoslovak Group (CSG) announced it has signed an agreement with American Vista Outdoor (Vista) to purchase the latter's ammunition division Sporting Products.
The $1.91bn transaction is subject to the approval of Vista shareholders and American as well as national regulators on the markets where Vista is active.
“This transaction fulfils our strategy to expand in key pillars of the CSG business, which include ammunition production,” CSG’s CEO and owner Michal Strnad stated.
Strnad highlighted that “our company and Czech industry accomplished historically [the] most significant Czech investment on the American market, which will deepen strategic industrial ties between the two countries”.
CSG’s investment director for foreign projects, David Stepan, added that with the acquisition of Vista’s Sporting Products, CSG “will become one of the most significant ammunition producers in the world with a complex portfolio of all calibres”.
Vista is in the process of splitting up into two entities. While CSG is to acquire the Sporting Products division, Outdoor Products, which offers helmets and water bottles, was renamed Revelyst and is set to become a separate business entity.
Reuters noted that Vista lowered its fiscal revenue forecast for 2024 due to hampered consumer demand and high-interest rates. It expects revenue between $2.73bn-$2.86bn for the year ending March 2024, down from the previous forecast of $2.85bn-$2.95bn.
CSG, on the other hand, is experiencing a surge in its revenues and profits. It has capitalised on the Russian invasion of Ukraine and ongoing reorientation of the Czech and Slovak defence industries to supply Ukraine with military and ammunition.
Last December, CSG acquired 70% of Fiocchi Munizioni, an Italian premium and super premium small-calibre ammunition manufacturer, which Strnad then described as “the largest financial investment in the history of our group”.
Already for 2021, CSG reported the highest growth in net profit in its history, up by 44% year on year to €52.7mn.
In the same year, CSG also paid out Slovak-Russian Alexey Beliayev, the long-term business partner of Strnad’s father, Jaroslav, who is also CSG’s founder, to become the 100% owner in DAKO-CZ, which is the leading Czech manufacturer of pneumatic, electromechanical and hydraulic brake systems for rail vehicles.
Czech investigative outlets describe Beliayev as maintaining links to Czech and Slovak populist leaders Andrej Babis and Robert Fico and the Kremlin.
CSG is known for having sponsored Czech ex-president and Putin’s former ally, Milos Zeman.
American company SARN attempted to use these links last month as part of its litigation against CSG. The Czech company lost a court case in Delaware, US, which it is now appealing.
In an email to bne IntelliNews after publication, CSG commented:
"The litigation between SARN and CSG is based on false accusations and was only launched to blackmail CSG and force CSG to make payments to which SARN is not entitled. The so-called final judgment of the Delaware court is neither new nor final. It has already been issued in 2020 and only now the amount was confirmed by the court of the first instance, due to weaknesses in SARN’s claim. It is subject to appeal and CSG has already confirmed it will be filing an appeal with the Supreme Court of Delaware, which can reverse or cancel the decision."
It also said that its links "to Russia, to Czech ex-president Milos Zeman or his advisors" were not addressed by the court and "are simply non-sensical and absolutely baseless".
"On the contrary CSG has been the largest Czech supporter of the Ukrainian nation in the war against Russia, both in respect to military as well as non-military items, and was repeatedly praised for this by the Czech government as well as Nato allies."
Czech Television reported last week that CSG is also facing industrial espionage allegations in Slovakia for allegedly copying the Slovak Army’s artillery system Zuzana. CSG denies the allegations.