Today, CZ Group signed an agreement to acquire 100 percent of the equity in Colt Holding Company, LLC, the parent company of Colt’s Manufacturing and Colt Canada for an upfront cash consideration of $220 million. The agreement also noted the issuance of 1,098,620 shares of newly issues CZ Group common stock.
“This merger is a strategic step for both companies,” said Lubomír Kovarík, president and chairman of CZ Group. “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 600 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.”
CZ plans to finance the acquisition of Colt with the company’s existing cash resources, including recent IPO proceeds and a contemplated bond issuance. The deal is still subject to regulatory approval, but the group anticipates a second-quarter 2021 closing.
“We are very pleased with the prospect of such a strategic combination,” said Dennis Veilleux, president and CEO of Colt. “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.”
PRAGUE, Feb 11 (Reuters) – 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 combined group would have revenue of more than $600 million, CZG said. CZG shares closed up at 360 crown on Thursday, valuing the stock portion of the deal at around 395.5 million crowns ($18.65 million).
There was also a potential consideration of another 1.099 million shares if EBITDA targets were met in 2021-2023, CZG said.
It expected the deal for Colt, a brand with a 175-year history, which emerged from bankruptcy in 2016, to close in the second quarter.
It would be financed from CZG’s cash including proceeds from a recent share offering and a potential bond issuance.
“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.
CZG closed an initial public offering in Prague in October although the deal was met with subdued demand, raising 812 million crowns, less than a fifth of its aim.
CZG shares closed Thursday above an IPO price of 290 crowns. With 32.64 shares, CZG had a market capitalisation of 11.75 billion crowns ($554.09 million).
The gunmaker posted record revenue of 5.0 billion crowns in the first nine months of 2020, a rise of 10% fuelled largely by sales growth in the U.S. market.