Apr 17, 2024 - Business

Sen. Kennedy warns CFIUS on Vista's Czech ammo deal

Sen. Kennedy

Sen. Kennedy. Photo: Eric Lee/Bloomberg via Getty Images

A second U.S. senator has warned the Treasury Department against a $1.9 billion deal involving the sale of a U.S. ammunition business to a Czech arms dealer.

Why it matters: Growing opposition to Vista Outdoor's ammo unit deal with the Czechoslovakian Group (CSG) could lead to the sale being blocked.

Zoom in: Sen. John Kennedy (R-La.) sent a letter to Treasury Secretary Janet Yellen late on Tuesday that raised national security concerns about Vista Outdoor's (NYSE: VSTO) agreement to sell its Sporting Products division to CSG.

  • Kennedy accused CSG of having business ties to China and raised the concern of a foreign owner controlling the supply and production of primers, an ammunition propellant.
  • The division makes ammo and related components that it sells to gun owners, hunters, and U.S. state and federal law enforcement agencies, including the U.S. Army.
  • CSG has publicly said that it has no ties with U.S. adversaries.

Context: The letter was addressed to Yellen because the Committee on Foreign Investment into the United States (CFIUS), which is currently reviewing the Vista-CSG agreement, sits within Treasury. CFIUS could decide to allow the deal to move forward, or it could decide to block it.

  • Sen. J.D. Vance (R-Ohio) issued a letter in January that urged CFIUS to reject the CSG deal.
  • Rep. Clay Higgins, a member of the House Homeland Security Committee, has voiced similar concerns, and a U.S. sheriffs' group added to the chorus of opposition this week.

Catch up quick: Vista Outdoor's two main businesses are the ammo unit and Outdoor Products, which makes gear such as CamelBak water packs and Camp Chef stoves.

  • The company initially planned to spin off the two businesses, with Vista's management team staying on to run the outdoor business.
  • Before the spinoff could happen, CSG moved to acquire the ammo business.

The intrigue: Vista's effort to complete the CSG deal comes as MNC Capital, a private investment group, is vying to buy both businesses for $3 billion.

  • MNC is a family office run by Mark Gottfredson, who previously sat on Vista's board. MNC's offer came in after the CSG deal was signed.

What they're saying: CSG points to its majority ownership of ammunition maker Fiocci as an example of its success operating in the U.S. That deal was granted CFIUS approval.

  • In letters to both Vance and the sheriffs group, CSG explained that it is a top ammunition supplier to NATO. The company has also highlighted its involvement with suppling Ukrainian forces in its war against Russia.
  • "Several of our companies hold top NATO security clearances and we work with U.S. defense companies. This would not be possible if we did business with U.S. adversaries such as Russia or China," CSG said.

What we're watching: Vista voluntarily withdrew its initial filing to CFIUS and refiled its CSG agreement notice to the committee on March 28, giving the government agency more time to conduct its review.

  • That typically kicks off another 45-day review period, which can be extended to 60 days.
  • That timing lines up with Vista's May 16 shareholder vote on the CSG agreement, a vote that hinges on the CFIUS decision.
Go deeper