After years of negotiations, a sigh of relief following $2.2B sale of Anoka ammo brands

Jason Vanderbrink is thankful the protracted sale of Anoka-based Vista Outdoor's ammunition company — the Kinetic Group — is finally done.

As CEO of Kinetic, Vanderbrink had not taken a full day off work in more than 2½ years and had repeatedly told workers not to let the sale become a distraction, but the process created uncertainty. After the deal was finalized last week, he said a sense of relief settled in among the company's 1,500 workers at the Federal plant in Anoka and at Kinetic's other ammunition companies.

"We have a new owner who's convinced to grow the business, and that uncertainty should go away," Vanderbrink said. "And I think they're relieved, and they're also excited to work on the private side."

The day before Thanksgiving, on Nov. 27, Prague-based Czechoslovak Group (CSG) finalized its acquisition of Kinetic for $2.225 billion. Two days before Vista's shareholders had finally approved the deal after adjourning a special shareholder meeting eight times.

Having private ownership will be a dramatic change after being at the mercy of shareholders in its multiyear attempt to sell off Vista's portfolio of ammunition brands, including Federal, Remington, Speer and CCI.

The plan to split the Anoka-based company's ammunition brands from its outdoor products took more than three years and endured more twists and turns than most corporate deals do. The idea was initially presented to the Vista Outdoor board of directors in November of 2021 and announced publicly the following May.

Now Vanderbrink can start looking ahead to the integration with CSG, an industrial and technology company with a large defense division.

"We ended up in a different spot than we had first laid out in May of 2022," Vanderbrink said in an interview Monday. "But it's a good thing for our employees, it's a good thing for our brands and for our company."

In addition to the sale of the Kinetic Group to CSG, Vista's deal also included divesting outdoor products brand Revelyst to Connecticut-based Strategic Value Partners for $1.125 billion. Revelyst will briefly trade as a public company, but SVP's deal is expected to close shortly after the new year.

The sale process was long and complicated. Public documents showed executives and board members worked late, through weekends and conducted dozens of tours. Vanderbrink admitted he hasn't taken a full day off in over 2½ years. But Vista shareholders were rewarded the longer the process played out.

CSG and Vista had agreed to sell Kinetic for $1.9 billion in October. But as the process unfolded, plans changed and the deal price rose as Vista eventually agreed to sell Revelyst.

"We ended up selling the whole company for $3.35 billion and the Kinetic Group for $2.225 billion so, I mean, the shareholders, just on the ammo side, made an additional $400 million," Vanderbrink said.

But owners were not the only concern. "We wanted what was best for all of our stakeholders, and our employees are our number one stakeholder," Vanderbrink said.

Vanderbrink said he is looking forward to growth. Key to the appeal of the bid was CSG's commitment to make capital investments to expand manufacturing and the prospect that it can enter new markets with CSG's backing.

According to Vanderbrink, the sale of Kinetic comes just after a global pandemic that helped generate millions of new gun owners in the United States. Those new gun owners were more diverse in age, gender and race and have remained active as hunters and sportsmen and sportswomen.

What CSG ended up winning was a collection of iconic ammunition brands including Federal and Remington — businesses that generate a lot of cash flow from sales of a highly consumable product. "Ammunition is the bread and butter of the firearms world. So you're always going to need ammunition," Vanderbrink said.

Throughout the negotiations, bidding process and regulatory reviews, CSG pledged to remain committed to U.S.-based manufacturing. "There is not enough ammunition at the moment, both on the [commercial] market, we believe, and also in the military segment and law enforcement," said David Štěpán, an investment director with CSG.

Štěpán will oversee the small-caliber ammunition division of CSG, which also includes Fiocchi, the Italian ammunition company that CSG acquired in 2022.

Knowing that iconic brands with long histories don't come up for sale often, CSG was determined to win and increased its bids to exceed unsolicited offers that came in after the initial deal with Vista Outdoor was accepted.

"It was always our owner, Michal Strnad's vision that he wanted to be a significant player in small-caliber ammunition," Štěpán said in an interview.

Even after nearly two years of due diligence examining the Kinetic Group, Štěpán said there is still more it needs to learn about the company and its brands — a process that can now begin in earnest as CSG looks to find procurement synergies, investments that provide the shortest rates of return, and ways for CSG to introduce the American brands to more countries in Europe.

According to Štěpán it does not make sense to move production away from the United States, the largest market for small-caliber ammunition. CSG acquired much more than brands — it acquired expertise built up over decades of experience, Štěpán said.

"So for me, of course, iconic brands like Federal, Remington and CCI and Speer, it's all great, all great, but those brands wouldn't exist without those people, you know," Štěpán said. "We have zero ambition to rock the boat. We want the brands to become even better and bigger and thrive."