News broke last month that Czech firearms maker CZ Group was in talks to acquire Colt Holding Company, the parent of legendary American firearms maker Colt’s Manufacturing, LLC. That deal is now done.
As Reuters reports . . .
CZG-Ceska Zbrojovka Group said on Thursday it would acquire group Colt Holding Company for $220 million and CZG shares as the Czech gunmaker expands in the larger U.S. market.
CZG, whose firearms include CZ (Ceska Zbrojovka), Dan Wesson and Brno Rifles, is active already in the United States and building a factory in Little Rock, Arkansas.
The Czech group said it would acquire 100% in Colt Holding, the parent of Colt’s Manufacturing Company and a Canadian subsidiary, for the cash consideration and 1.099 million pieces of newly issued CZG stock.
The combination of the two gun makers creates a half billion dollar firearms manufacturing giant that will be approximately the same size as Ruger.
“With this strategic move, CZG will acquire significant production capacity in the United States and Canada and substantially expand its global customer base,” CZG said, adding Colt was a traditional supplier to military and law enforcement, a target customer group for the Czech group.
For those who are fans of the rampant pony, this should be seen as a positive move. While having an iconic American brand owned by a foreign firm may be jarring to some, CZ has a well-deserved reputation for producing excellent products and delivering good customer service.
Colt hasn’t been a healthy company for at least a decade. After losing its military contracts, it filed for bankruptcy protection in 2017. And while the return of quality versions of some of their much-loved snake guns to their product line has been a plus, the Colt lineup hasn’t been one that has wowed retail gun buyers in a very long time.
The CZ acquisition now ensures that the brand will continue under better, more innovative leadership that’s well-financed and seems determined to restore the Colt name to its former place of prominence in the minds of America’s gun buyers. It should be fun to watch how this develops.
Here’s Colt’s press release . . .
Česká zbrojovka Group SE to acquire Colt West Hartford, CT, February 12, 2021 – Colt Holding Company LLC (“Colt”) hereby announces that on February 11, 2021, it executed a definitive agreement to be acquired by CZG – Česká zbrojovka Group SE (“CZG” or “the Group”) Colt is the parent company of U.S. firearms manufacturer, Colt’s Manufacturing Company LLC as well as its Canadian subsidiary, Colt Canada Corporation.
Subject to the terms and conditions of the definitive agreement, CZG shall acquire a 100% stake in Colt for upfront cash consideration of $220 million and the issuance of 1,098,620 shares of newly issued CZG common stock. The agreement also provides for potential earnout consideration of up to 1,098,620 shares of newly issued CZG common stock if defined EBITDA thresholds are achieved in years 2021 – 2023.
Commenting on today’s announcement, Lubomír Kovařík, President and Chairman of CZG, said: “This merger is a strategic step for both companies. The acquisition of Colt, an iconic brand and a benchmark for the military, law enforcement and commercial markets globally, fits perfectly in our strategy to become the leader in the firearms manufacturing industry and a key partner for the armed forces. We are proud to include Colt, which has stood shoulder-to-shoulder with the U.S. Army for over 175 years, in our portfolio. We believe in the successful connection of our corporate cultures, the proven track record of the current management team and the complementary nature of the CZ and Colt brands. The combined group will have revenues in excess of USD 500 million and presents a real small arms powerhouse. The experience of CZ and Colt management will further strengthen both brands and ensure CZ and Colt continue to deliver top quality products and solutions to all our customers.”
Dennis Veilleux, President and CEO of Colt, agreed: “We are very pleased with the prospect of such a strategic combination. Having completed a historic turn-around of the operations and financial performance at Colt over the past five years, this important next step with CZG positions the company to take advantage of significant growth opportunities. We are excited to join forces with CZG which will be a powerful combination for both brands and for our customers.”
The acquisition is to be financed from CZG’s existing cash resources, including recent IPO proceeds, and from a contemplated bond issuance by CZG.
The transaction is subject to regulatory approval but is anticipated to close in the second quarter of 2021.
With this strategic move, CZG will acquire significant production capacity in the United States and Canada and substantially expand its global customer base. Colt is a traditional supplier to global military and law enforcement customers. Among others, Colt is a long-term supplier to the U.S. Army (which relationship dates back over 175 years) and, through its Canadian subsidiary, Colt is a designated exclusive supplier of small arms to the Canadian military.