Yellen Asked to Probe Issues in an Ammunition Maker’s Sale
(Bloomberg) -- Representative Clay Higgins, a member of the House Homeland Security Committee, has asked Treasury Secretary Janet Yellen to “thoroughly review national security concerns” in the proposed sale of a US ammunition manufacturer to a firm based in the Czech Republic.
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The concerns involve the sale of Vista Outdoor’s ammunition business to the holding company Czechoslovak Group, or CSG, which Higgins said would weaken national security if the Committee on Foreign Investment in the US, or Cfius, approves the sale.
The Louisiana Republican said in a letter that the sale of Vista Sporting Products to CSG would result in the firm controlling “nearly 70% of production capacity for primers in the Western world.” Primers are the component of a bullet that ignites the charge, sending the projectile down the barrel of a pistol or rifle.
“For these reasons, I request Cfius to carefully examine national security concerns of the proposed acquisition,” Higgins wrote in his letter to Yellen, adding that Cfius should also examine any “past or current relationship between CSG’s owners and foreign adversaries.” Higgins contended that CSG had “ties to Russia and China.”
CSG spokesman Andrej Cirtek said in a statement that “any speculations about CSG’s ties to Russia or China are nonsense. This is proved by facts: We support Ukraine with much-needed deliveries of artillery ammunition, tanks or artillery systems.”
Cirtek said that companies under the CSG banner have secret-level security clearances in the Czech Republic and North Atlantic Treaty Organization and work with US defense contractors, which wouldn’t be possible if the company had ties to US adversaries such as Russia and China.
Army, FBI
CSG acquired a 70% stake in Italian ammunition manufacturer Fiocchi Munizioni in 2022. CSG’s acquisition of Fiocci’s US production sites was previously approved by Cfius, according to Cirtek.
Higgins cited Vista’s contracts to provide ammunition to the US Army, the FBI, the Secret Service, the Customs and Border Protection agency and local law enforcement agencies in his concerns about Vista’s ammunition business being sold to a foreign company.
In a Securities and Exchange Commission filing on March 4, Vista Outdoor, which also makes camping and sporting goods such as bike helmets and binoculars, disclosed that Cfius would need to clear the transaction. The company didn’t immediately respond to a request for comment on the Higgins letter.
A complicating angle to the proposed sale: Higgins said the deal could jeopardize the US Army’s ability to procure ammunition from its Lake City Ammunition Plant in Independence, Missouri. The plant is owned by the military but managed by one of two manufacturers — Olin Corp.-owned Winchester or Vista and its predecessors — that have traded contracts for the work since the plant’s founding in 1941, according to Higgins.
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Higgins said the deal also would leave police departments across the country “heavily reliant” on foreign providers of primers and ammunition.
Cfius is composed of a representatives from agencies across the federal government but is convened by the Treasury, which chairs the committee.
MNC Capital Partners LP submitted on Monday a rival bid for the company at $37.50 per share, valuing both the consumer products and ammunition manufacturing divisions of Vista’s business at about $3 billion. MNC said its offer would not be subject to Cfius review.
In a letter to their employees, Vista executives said that a previous offer from MNC of $35 per share was “an inferior path to the one we’re on by selling” the ammunition business to CSG, “and is not in the best interest of our stockholders.”
(Adds a previous CFIUS approval in seventh paragraph. A previous version of this story had an incorrect description of CSG’s security clearances.)
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