Picture: 123RF/ POP NUKOONRAT
Picture: 123RF/ POP NUKOONRAT

Czech firearms producer Ceska Zbrojovka Group (CZG) said on Monday the acquisition of rival Colt will boost its production capacity in the growing North American market.

After agreeing last week to take over the iconic 175-year-old manufacturer, CZG expects the combined revenue to double to $1.2bn a year by 2025, CFO Jan Drahota told reporters on Monday. The deal will help the Prague-traded company win public contracts in the US and Canada, on top of its already booming sales to civilian customers.

“Our expectation is that there will be growth in both of these segments, but the military and law enforcement market will be growing more than the civilian one,” Drahota said. “Demand for our products is higher than we are currently able to produce.”

Less than four months after its initial public offering, Ceska Zbrojovka is making an acquisition that will almost double its size and expand its products to include Colt revolvers and machine guns. The stock has rallied 31% since the Czech company announced progress in the merger talks five weeks ago.

Ceska Zbrojovka is already selling most of its output in the US, where revenue in the first half of 2020 jumped 57% from a year earlier as social unrest boosted demand for guns. During a White House visit in March 2019, Czech Prime Minister Andrej Babis gave President Donald Trump a gold-decorated commemorative pistol made by CZG.

CZG, which was founded in 1936 and bought American producer Dan Wesson Firearms in 2005, plans to issue bonds and new shares to help fund the new investment. As a result of the Colt deal, it has postponed the construction of its own factory in Arkansas, previously scheduled to start in 2021, by three to five years.

CZG sees “quite a bit of room” for both organic growth and potential further acquisitions, which could focus on electronisation, optics and ammunition for small arms, according to Drahota.

“Our ambition is to become one of the leaders, or the leader, of the small-arms industry,” he said. “The acquisition of Colt is definitely an important step.”

Bloomberg

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