Czech giant CZG (Česká zbrojovka Group) has signed an agreement to acquire 100 per cent of the outstanding equity interest in Colt Holding Comping, the parent of US firearms icon Colt Manufacturing Company as well as its subsidiary Colt Canada Corporation.
Subject to the terms and conditions of the definitive agreement, CZ will take a 100 per cent stake in Colt for US$220 and the issue of more than one million shares of newly-issued CZ common stock. The deal also provides for potential earnout consideration of up to 1,098,620 shares of newly-issued CZ common stock if defined earnings before interest, taxes, depreciation and amortization (EBITDA) thresholds are achieved in 2021-2023.
Lubomír Kovařík, CZ president and chairman, said: “This merger is a strategic step for both companies. The acquisition of Colt, an iconic brand and 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 US Army for more than 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 US$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.”
The acquisition is to be financed from CZ’s existing cash resources, including recent IPO proceeds, and from the proposed bond issuance. The transaction is subject to regulatory approval but is anticipated to close in the second quarter of this year.
Said Colt president and CEO Dennis Veilleux: “We are very pleased with the prospect of such a strategic combination. Having completed a historic turnaround 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’re excited to join forces with CZG which will be a powerful combination for both brands and for our customers.”
The move will see CZ acquire significant production capacity in the US and Canada and substantially expand its global customer base. Colt is a traditional supplier to global military and law enforcement customers, a long-term supplier to the US Army and, through its Canadian subsidiary, a designated exclusive supplier of small arms to the Canadian military.