Remington's sale of its ammunition arm to a foreign buyer is raising eyebrows

Vista Outdoor reached a $1.96 billion agreement with the Czechoslovak Group (CSG) for the sale of its ammunition company, The Kinetic Group, which partners with brands like Remington and Federal.

While the company is confident the Committee on Foreign Investment in the U.S. (CFIUS) will approve the pending deal this year, it has sparked controversy in Washington. 

Lawmakers, including Louisiana Sen. John Kennedy, are raising a red flag over the U.S. becoming overly reliant on a foreign company for ammunition and CSG’s alleged ties to Russia and China.

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"Sen. Kennedy is concerned about Czechoslovak Group’s potential acquisition of Vista Outdoors because it could make the U.S. Army reliant on a sole U.S. contractor for ammunition and U.S. law enforcement agencies more reliant on foreign providers of primers and ammunition," an aide from Kennedy’s office told FOX Business. "Furthermore, CSG’s attempt to blur its ties to Russia and China is deeply troubling."

In a letter to U.S. Treasury Secretary Janet Yellen, Kennedy warns that if the deal goes through, CSG would own 70% of primer production. Primers are known for igniting the gunpowder in a bullet to allow it to go off.

Despite these concerns, Vista remains confident in CFIUS’s process to approve the deal and allow for CSG to purchase Kinetic. CSG is based in Europe, but already has a footprint on U.S. soil since its purchase of Fiocchi Munizioni in November 2022.

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Fiocchi is a European ammunition company that has a U.S. branch with manufacturing plants in Little Rock, Arkansas, and Ozark, Missouri. Along with Vista, they are known for developing primers for bullets.

CSG may be winning the bid for Vista so far, but it is not alone. Texas-based MNC Capital Partners LP is led by former Vista board member Mark Gottfredson. He believes Vista is a valuable company that needs to stay in the hands of an American-based company.

"We strongly believe that Vista Outdoor should remain American-owned," Managing Director Gottfredson told FOX Business. "Our all-American offer doesn’t require approval from CFIUS, and we feel it is the best deal for shareholders, for national security and for consumers."

MNC's latest offer of over $3 billion for the entirety of Vista Outdoor was rejected Monday by Vista. Simultaneously, Vista announced it had received a $2.01 billion offer from "an alternative party," which is a private investment firm based in the U.S.

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Despite these higher offers to purchase Vista, its management continues to stand behind the recommendation of CSG as the company to purchase Kinetic because of its promise to maintain Vista’s U.S. presence in sales and manufacturing.

"Vista Outdoor ammunition is Made in the USA today, and our ammunition will be Made in the USA after the transaction closes," a Vista Outdoor spokesperson told FOX Business. "The U.S.-based management team and CSG are jointly committed to U.S.-based production and the continued supplying of ammunition to American consumers, law enforcement and military partners."

Following Vista’s confidence in the sale to CSG, a third-party advisory firm, Institutional Shareholder Services, conducted a review of the sale with a recommendation to shareholders to vote in favor of the proposed sale of Kinetic to CSG, announced June 3 in a Vista press release.

Vista is scheduled to have its next shareholder meeting on July 2 for a vote on the sale of Vista Outdoor to the Czechoslovak Group.

Shares of Vista have advanced 21% this year, ahead of the S&P 500's 12% run.