The sale of Vista Outdoors’ legacy ammunition brands — Federal, Remington, Speer, and CCI — to the Czechoslovak Group (owner of ammunition manufacturer Fiocchi) seemed to be on a smooth glide to landing just a few months ago. Now, that sale could be wrecked by a couple of senators, an emergent and mysterious capital investor, and a savvy lobbying effort working outside of the firearms industry to influence a different outcome. Sausage is being made in D.C., and its making ain’t pretty.
by Rob Reaser; with Jim Shepherd (The Outdoor Wire)
In December of last year, we published a “what the heck is going on?” piece regarding the pending sale of Vista Outdoors’ ammunition manufacturing segment (Kinetic Group) to Czechoslovak Group (CSG). The primary thrust of the article was to give our readers a better understanding of who it was that intended to purchase these legendary American brands. Like many of you, we are a bit gun shy (and rightly so) every time we hear of a big money concern taking over a favored hunting or shooting brand. We’ve seen this movie several times over the last couple of decades, and the ending doesn’t usually leave us in glowing satisfaction.
What seemed to give us some good vibes about this potential Vista/CSG acquisition was a positive track record, short as it is, of the buyer.
CSG, as you may remember, purchased 70 percent of Fiocchi Munizioni in late 2022. While an Italian concern, Fiocchi is a major ammo and component manufacturer in the U.S., with facilities in Ozark, Missouri, and Little Rock, Arkansas. Any trepidations of a Czech Republic business owning the majority stake in a high-value U.S. ammo company quickly proved unfounded. Not only has Fiocchi benefited from the new CSG ownership, as Fiocchi USA CEO and President David Blenker explained to us in our previous article, the company has experienced solid growth since the acquisition.
In our December report, CSG’s David Štēpán, who serves as the CEO of Fiocchi Munizioni — in addition to being a CSG Board Member and the company’s Investment Director for International Projects — was quite open in answering our big question… “Who is CSG?”…and he seemed certainly transparent in describing CSG’s history, current operations, and philosophy.
In short, we were left with a favorable impression of CSG and optimistic of the company’s intended acquisition of the Vista Outdoors Kinetic Group.
That good impression ramped up a few more notches when we were invited to a private press meeting with Štēpán and Blenker during this year’s SHOT Show in Las Vegas. During his presentation to outdoor media members, Štēpán provided the bird’s-eye view of CSG, its portfolio of companies, history, and its business philosophy. And with refreshing openness (as us American media types reckon it), Štēpán encouraged us to test CSG’s transparency by opening the meeting for questions…any questions. Nothing was off the table.
What I have found most promising with CSG’s intent to purchase the Vista Outdoors Kinetic Group is that CSG is a private, one-owner entity with the stated goal of doing good business in the long term. I say that to contrast what we have seen in the outdoor industry over the years, where private equity firms acquire a brand or family of brands with the “buy, turn, and burn” business plan — buy a company, turn up the heat to boost profitability, then hopefully sell for a profit in a few short years while the brand(s) are left to smolder in the aftermath.
Since the conclusion of SHOT Show in January, we have kept our eyes on the Vista/CSG affair, and the recent view from this observation point has been alarming and more than a little disturbing.
There is something that appears to be rather suspect afoot that is including U.S. senators (J.D. Vance R-Ohio and John Kennedy R-Louisiana, at a minimum), an opaque investment concern called MNC Capital Partners, of which no one we’ve talked to in the outdoor segment seems to know anything about, and an extremely crafty PR/lobbying effort that is nudging stories to the national and financial news players in an effort to, what seems obvious to us, derail the acquisition of Vista Outdoors’ Kinetic Group by CSG.
You can read the letters by Senators J.D. Vance (here) and John Kennedy (here) penned to U.S. Treasury Secretary Janet Yellen for yourself. You will also want to read the open letter response by CSG to Senator Vance refuting his concerns and claims. Senator Kennedy and the National Sheriffs Association (another anti-CSG-acquisition player that somehow popped up in all of this) also received letters from CSG.
A coordinated effort or a coincidence? You decide.
I had intended earlier this week to tie some of this together and present it as an update for our readers, but our friend and intrepid editor/trail boss of The Outdoor Wire news service, Jim Shepherd, was tracking the same trail and published a probing piece in his April 17 edition.
Rather than attempt to plow the same ground, Jim offered to let us run his following report, in its entirety, for our Shoot On audience.
[On a side note, The Outdoor Wire is the capstone of several vertical “wire” services covering the outdoor sports and shooting industries. Subscriptions are free, and you can pick the services you would like delivered directly to your inbox.]
Vista/CSG Deal: The Victim of Disinformation Campaign?
In the outdoor industry, handshakes often seal agreements and paperwork is a formality. Sure, deals fall through, but seldom is the problem due to another suitor popping up.
That’s why the proposed acquisition of Vista Outdoors’ Kinetic group (the ammo makers) by the Czech Republic’s CSG has gotten a lot of attention.
Yesterday, a pair of letters from CSG’s top management to a United States Senator and the CEO of the National Sheriffs Association seem to indicate there’s been a sophisticated PR campaign being waged against the CSG/Kinetic deal.
The letters address misconceptions, if not outright falsehoods, regarding the deal. They also raise another unanswered question: who’s trying to stop this deal?
Some Wall Street observers are saying — not for attribution — they suspect CSG’s being forced to address a disinformation campaign designed to drive the Vista Board of Directors to a possible alternative deal from MNC Capital Partners.
On February 19, after the announcement of the planned CSG acquisition, MNC Capital Partners (which includes former Vista BoD member Mark Gottfedson) entered a competing bid, offering $35/share for both parts of Vista, a $5 per share bump over Vista’s then-current stock price.
That bid was rejected.
The rejection, as explained by Vista Board official Michael Callahan, was due to a lack of confidence that MNC actually had financing sufficient to close their nearly $3 billion offer.
At that point, the Vista/CSG deal appeared to be moving, subject to requisite federal review (CFIUS), when any U.S. company is being acquired by a foreign entity.
On March 25, MNC made a second unsolicited offer — this one at $2.50/share above their earlier $35/share bid. Significantly more than the Vista/CSG’s proposed purchase of the Kinetic business.
Now it appears a simultaneous PR and political lobbying effort was being mounted by someone to stop the CSG deal.
On April 8, the CSG issued a detailed statement outlining the benefits of their planned acquisition. Principal among those benefits was the fact the deal was an “all-cash acquisition including fully committed financing (my italics) backed by ‘leading U-S Bank JP Morgan Chase.”
Their statement also reminded readers that: 1) the proposed transaction had already received FTC clearance, 2) CSG was a “significant supplier to NATO” with several companies with top NATO security clearances, and, 3) CSG already operated ammunition facilities in Arkansas and Missouri acquired via a CFIUS transaction in 2022.
After yesterday’s letters, it appears this was CSG’s initial attempt to stop the whispers.
Apparently, that didn’t work. But it did raise the question as to why anyone would object to the sale, especially since CSG already owns — and operates — ammunition facilities here in the United States.
That’s when a “blurb” in a financial research newsletter caught my attention.
On Tuesday, March 26, Gordon Hackett Research Advisors’ newsletter asked a simple question: “Who behind the grassy knoll is aiming at VISTA?”
The piece raised more questions than answers, but it did make it fairly apparent that a full-court PR press was in place against CSG.
U.S. Senator JD Vance (R-Ohio) has apparently got involved after sending a January letter to Treasury Secretary Janet Yellen raising concerns over the deal.
Vance’s letter accuses CSG of “a long record of wrongdoing” and “well-documented connections to American adversaries.” It went on to accuse CSG of dealing with Russia’s Vladimir Putin as well as violating international arms embargoes.
That, it seems, was a bridge too far for CSG owner and CEO Michal Strnad.
Yesterday, Strnad sent an open letter to Vance, saying he was “shocked by the false accusations.”
“Senator,” the letter reads, “with all due respect, your assessment of us was profoundly mistaken. CSG is one of the most important private supporters of the Ukrainian military effort, a country to which we have supplied much-needed weapons systems dating back to 2018, well before the outbreak of open Russian aggression.”
“CSG Group companies,” the letter continues, “are also suppliers to the U.S. military and have a significant history of cooperation with major American defense industry corporations.”
“Any speculation about the CSG’s connection to the Putin regime,” Strnad wrote, “should be considered nonsense.”
For the record, CSG stopped supplying trucks to Russia’s mining industry after the Ukrainian invasion. CSG, it says, has never been investigated, much less sanctioned, for violating any arms embargoes.
The letter (a link to the entire letter is below) then says the most convincing argument is “one you can experience yourself” and invites Vance to visit “CSG member companies in the U.S. and Europe to experience first-hand who we really are.”
Late yesterday, CSG took aim at another group opposing their acquisition: the National Sheriff’s Association. That organization sent an April 9 letter to the Attorney General and Homeland Security Secretaries expressing their concern — if not outright opposition — to the CSG/Kinetic acquisition.
The Sheriffs Association had expressed concerns that the acquisition could cause a “disruption in access to affordable and reliable American-made ammunition and primers.”
CSG’s AMMO division CEO David Štēpán responded that his company had “publicly stated our pledge to maintain Vista’s manufacturing operations in the United States, led by the same topflight American management team that runs its operation today.”
“We have no plans,” Štēpán wrote, “to move any employment or production overseas.”
He also reminded Association Executive Director and CEO Jonathan F. Thompson that foreign ownership, including Fiocchi (now majority-owned by CSG) and South Korean ammunition maker PMC, both sell to U.S. law enforcement.
His response to the “trepidations” members might have regarding CSG’s relationships with U.S. adversaries in unmistakable terms:
“The short answer is, we have no ties. CSG is among the top providers of artillery ammunition for NATO and recently announced we intend to invest several hundred million dollars in our ongoing efforts to bolster Ukraine’s defense capabilities by expanding our supply of artillery ammunition, tanks and artillery systems in the country.”
“All of us,” Štēpán concluded, “at CSG are committed to transparency. We are also committed to doing what’s best for all our future customers in the United States.”
Having met and spoken at length with CSG officials, I have found there’s very little they won’t discuss. Those discussions with them actually explained why companies like CZ and CSG are interested in U.S. businesses.
If you’re in the civilian firearms or ammunition business, the U.S. is the one place — globally — where the firearms market is actually expanding.
As to MNC, there’s very little information available. As the Gordon Hackett report stated, “Other than seeing it described as a Dallas-based family office, details on MNC are in short supply.”
Today, as on March 26, their website is nothing more than a landing page. Other than Gottfredson, who was a member of Vista’s Board of Directors until January, little else is known. Nothing else is being offered.
We’re watching. And, as always, we’ll keep you posted.
— Jim Shepherd
