Submitted by United States Senator John Kennedy of Louisiana
WASHINGTON (Apr. 16, 2024) – Senator John Kennedy (R-La.) today called upon the Biden administration’s Committee on Foreign Investment in the United States (CFIUS) to investigate the Czechoslovak Group’s (CSG) proposed acquisition of U.S. ammunition producer Vista Outdoor Sporting Products.
Kennedy wrote Treasury Secretary Janet Yellen, Chair of the CFIUS, about concerns regarding the deal because it would lead to an unprecedented consolidation in the global ammunitions market.
“I write to draw your attention to potential national security concerns arising from the proposed acquisition of Vista Outdoor’s Sporting Products business (‘Vista Sporting Products’) to Czechoslovak Group (‘CSG’), a foreign arms dealer with ties to China that has been recently acquiring key suppliers of ammunition and primers used by the U.S. military and law enforcement,” Kennedy wrote.
The senator highlighted three main concerns about the acquisition, including that it would give CSG immediately control over nearly 70% of production capacity for primers in the western world. That means that the U.S. Army could become reliant on a sole U.S. contractor for ammunition and U.S. law enforcement agencies would become more reliant on foreign providers of primers and ammunition.
“Further complicating this matter, questions have arisen in recent weeks related to CSG’s relationships with China. It appears the company has taken actions to obscure its past relationships with China and insist it has no current relationships with our adversaries,” the senator continued.
“For these reasons, I request CFIUS to carefully examine national security concerns of the proposed acquisition, specifically concerning the potential impact of the transaction on the U.S. military and law enforcement’s reliable access to an affordable supply of primers and ammunition, and the company’s attempts to obfuscate its relationship with China,” Kennedy concluded.
Background:
- On Oct. 16, 2023, Vista Outdoor announced an agreement to sell its Sporting Products business to CSG for $1.9 billion.
- The proposed acquisition is the latest example of unprecedented consolidation in the global ammunition market occurring in Europe. For example, Beretta acquired the Ammotec division of RUAG International in March 2022, and CSG gained a majority stake investment in Fiocchi Munizioni in Nov. 2023.
- The proposed acquisition must undergo shareholder and regulatory approvals, including a national security review, by CFIUS.
- In Dec. 2023, Vista Outdoor and CSG disclosed that they received antitrust approval from U.S. antitrust regulators. However, the proposed acquisition did not happen within the initial 45-day CFIUS review window.
The full letter is available here.
UPDATE
April 17, 2024 – After publishing Senator Kennedy’s Press Release above, BY Local News received an email with the following press release by The Czechoslovak Group that appeared in Business Wire, and a pdf of a letter from CSG to Senator J.D. Vance and a press release from The Outdoor Wire’s VISTA/CSG Deal: The Victim of Disinformation Campaign?.
The Czechoslovak Group Highlights the Benefits of Its Planned Acquisition of Vista Outdoor’s Sporting Products Business, The Kinetic Group
Reiterates that Definitive Merger Agreement For All-Cash Acquisition Includes Fully Committed Financing Backed by Leading U.S. Bank JP Morgan Chase
Emphasizes that CSG is a Significant Supplier to NATO, Has Several Companies with Top NATO Security Clearance and Works with Leading U.S. Defense Companies
Notes that CSG Operates Ammunition Production Facilities in Arkansas and Missouri Acquired in a Transaction Approved by CFIUS in 2022
CSG-Vista Outdoor Transaction Has Already Received Antitrust Clearance from the FTC
The Czechoslovak Group (“CSG”) today issued a statement reaffirming its commitment to the proposed all-cash acquisition (the “Acquisition”) of Vista Outdoor Inc.’s (NYSE: VSTO) (“Vista Outdoor”) Sporting Products business – recently renamed The Kinetic Group – for a total consideration of $1.91 billion, with fully committed financing from leading U.S. bank JP Morgan Chase. CSG also highlighted the benefits of its planned Acquisition:
“CSG is a leading industrial technology company operating across strategic business segments including defense, aerospace, ammunition and mobility. Under the leadership of current CEO and 100% owner Michal Strnad, CSG has become the pre-eminent Czech industrial group and built an extensive global footprint.
We have a demonstrated history of supporting the long-term growth of our portfolio companies. We look forward to successfully closing the Acquisition of The Kinetic Group and becoming the steward of such venerable American brands as Federal, CCI and Remington. As we have publicly stated, we intend to keep in place The Kinetic Group’s existing leadership, invest in the business and continue production in the U.S.
Additionally, we would note that we have continued to invest in the U.S. facilities we already own in Arkansas and Missouri and have increased output at those plants – allowing us to provide even more supply to our American customers.
We would also like to highlight several benefits of the planned Acquisition and details about CSG’s track record, including:
- We are a significant supplier to NATO and Ukraine and have no ties to Russia, China or other U.S. adversaries. CSG is among the top providers of artillery ammunition for NATO and recently announced that we intend to invest several hundred million dollars more in our ongoing efforts to bolster Ukraine’s defense capabilities by expanding our supply of artillery ammunition, tanks and artillery systems to the country.1 Several of our companies hold top NATO security clearances and we work with U.S. defense companies. This would not be possible if we had ties to U.S. adversaries such as Russia or China.
- We have demonstrated our commitment to manufacturing in the U.S. Through our ownership of Fiocchi Munizioni, we already have a U.S. presence, with production facilities in Little Rock, Arkansas and Ozark, Missouri. In fact, we are currently considering expanding our U.S. production capacity. Any claim that CSG has eliminated U.S. jobs is completely wrong.
- We intend to respect and maintain the production quality and supply of legacy brands that Americans have relied on for decades. CSG understands the special importance to American consumers of the brands that are part of The Kinetic Group. Our senior team includes experienced industry professionals who manage our firearms related businesses. We have demonstrated through our ownership of Fiocchi Munizioni and Armi Perazzi that we are deeply committed to providing high-quality products to customers. Our focus will be on preserving and developing the entire product portfolio of the business and maintaining the standards that customers expect.
- We are committed to supporting the regulatory review process and remain confident we will receive all necessary approvals for the Acquisition. In December of 2023, the required waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 expired, meaning the Federal Trade Commission (“FTC”) has cleared the Acquisition from an antitrust perspective. On March 28, Vista Outdoor and CSG announced that we had voluntarily withdrawn and re-filed our joint voluntary notice to the Committee on Foreign Investment in the United States (“CFIUS”) to allow CFIUS additional time to conduct diligence on the proposed Acquisition. Working alongside Vista Outdoor, we are actively engaged in the process and believe we will secure all required approvals. It’s important to note that we successfully went through CFIUS screening when we acquired Fiocchi of America and its Arkansas and Missouri facilities in 2022.”
About Czechoslovak Group
Czechoslovak Group (CSG) is an international industrial technology holding company owned by Michal Strnad. CSG supports the development of Czech and Slovak companies engaged in defense and civil industrial production and trade. More than 10,000 people are employed by CSG companies and affiliates. In 2023, the holding’s preliminary 2023 consolidated revenues reached $1.85 billion. CSG operates across four strategic business segments covering aerospace, ammunition, defense, mobility and business projects.
