Lake City Ammo Plant May Soon Be Controlled By Foreign Buyer

Eurasia Review Reports:

In October 2023, the Czechoslovak Group (CSG), of Prague, Czech Republic, entered into a definitive agreement to buy the ammunition brands of Vista Outdoor Inc. for $1.9 billion. Vista is an outdoor sports company that specializes in outdoor products, i.e., camp equipment, and shooting sports, i.e., ammunition.

n February, U.S.-based MNC Capital Partners and a private equity partner made their first offer to buy Vista for $35.00 per share in cash for both the outdoor products and ammunition pieces. The offer was rejected by the Vista board in March.)

The senators claim the deal will put a foreign company that has ties to Russia and China in control of primer production, and at the helm of the Lake City Army Ammunition Plant, a government-owned, contractor-operated producer of small arms ammunition for the U.S. government and civilian buyers.

The acquisition must be approved by the Committee on Foreign Investment in the United States (CFIUS) and Senator Kennedy asked Janet Yellen, the Secretary of the Treasury to ensure that CFIUS will “carefully examine national security concerns of the proposed acquisition.”

In response to the legislators, Michal Strnad the CEO of CSG, claimed CSG was a significant supplier to NATO countries, “has never had any ties to Putin’s regime,” only ever exported civilian products to Russia, never broke any embargoes, and has never been sanctioned. Strnad then invited Senator Vance to “visit SG member companies in the U.S. and Europe to experience first-hand who we really are.”

Assuming everyone is being high-minded here, what are next steps?

First, CRIUS must decide on CSG’s fitness as a buyer of Vista, which will mean plumbing the senators’ concerns about Russia and China connections.

The Pentagon has a vote in CFIUS and it has recently revived concerns about lack of competition in the defense sector. In a 2022 report, “State of Competition within the Defense Industrial Base,” the Pentagon identified munitions are one of five “Priority Industrial Base Sectors” and declared “Each M&A [mergers and acquisitions] case should be reviewed carefully for negative effects on competition.”

What is the best deal for the U.S.?

The best deal for the U.S. is a higher offer from MNC so Vista’s American shareholders get more cash, and an invitation to GSG to invest that $1.9 billion in greenfield ammunition plants in the U.S. which, as new facilities, will compete with existing manufacturers and ensure government and private buyers in the U.S. get the best deal. Also investing in the U.S. may turn CSG’s challengers on the Hill into champions if the firm can create jobs in the U.S. while contributing to the robustness of America’s defense industrial base.