Who’s Running a Disinformation Campaign Against the Vista/CSG Deal & Why?

This article reprint appears here with permission of Jim Shepard and Theoutdoorwire.com


In the outdoor industry handshakes often seal agreements and paperwork is a formality. Sure, deals fall through, but seldom is the problem due to another suitor popping up. That’s why the proposed acquisition of Vista Outdoors’ Kinetic group (the ammunition makers) by Czechoslovakia’s CSG has gotten a lot of attention.

Yesterday, a pair of letters from CSG’s top management to a United States Senator and the CEO of the National Sheriffs Association seem to indicate there’s been a sophisticated PR campaign being waged against the CSG/Kinetic deal.

The letters address misconceptions, if not outright falsehoods, regarding the deal. They also raise another unanswered question: who’s trying to stop this deal?

Some Wall Street observers are saying — not for attribution — they suspect CSG is being forced to address a disinformation campaign designed to drive the Vista Board of Directors into a possible alternative deal from MNC Capital Partners.

On February 19, after the announcement of the planned CSG acquisition, MNC Capital Partners (which includes former Vista board member Mark Gottfredson) entered a competing bid, offering $35 per share for both parts of Vista, a $5 per share bump over Vista’s then-current stock price.

That bid was rejected.

Vista Outdoors NYSE VSTO screengrabVista Outdoors NYSE VSTO screengrab
Vista Outdoors NYSE VSTO

The rejection, as explained by Vista Board official Michael Callahan, was due to a lack of confidence that MNC actually had financing sufficient to close their nearly $3 billion offer. At that point, the Vista/CSG deal appeared to be moving, subject to requisite federal review (CFIUS) when any U.S. company is being acquired by a foreign entity.

On March 25, 2024, MNC made a second unsolicited offer, this one at $2.50 per share above their earlier $35 per share bid. That was significantly more than the Vista/CSG’s proposed purchase of the Kinetic business. Now it appears a simultaneous PR and political lobbying effort was being mounted by someone to stop the CSG deal.

On April 8, CSG issued a detailed statement outlining the benefits of their planned acquisition. Principal among those benefits was the fact the deal was an “all-cash acquisition including fully committed financing backed by ‘leading U-S Bank JP Morgan Chase.” (italics added)

Their statement also reminded readers that,

  • 1) the proposed transaction had already received FTC clearance,
  • 2) CSG was a “significant supplier to NATO” with several companies with top NATO security clearances, and,
  • 3) CSG already operated ammunition facilities in Arkansas and Missouri acquired via a CFIUS transaction in 2022.

Yesterday’s letters appear to be CSG’s initial attempt to stop the whispers. Apparently, that didn’t work. But it did raise the question as to why anyone would object to the sale, especially since CSG already owns and operates ammunition facilities here in the United States.

That’s when a “blurb” in a financial research newsletter caught my attention.

On Tuesday, March 26, Gordon Hackett Research Advisors’ newsletter asked a simple question: “Who behind the grassy knoll is aiming at VISTA?” The piece raised more questions than answers, but it did make it pretty apparent that a full-court PR press is on against CSG.

Senator Vance Urges Biden Admin To Investigate Sale Of Us Firearm Manufacturer To Kremlin-Linked Foreign CompanySenator Vance Urges Biden Admin To Investigate Sale Of Us Firearm Manufacturer To Kremlin-Linked Foreign Company
Senator Vance Urges Biden Admin To Investigate Sale Of Us Firearm Manufacturer To Kremlin-Linked Foreign Company

U.S. Senator J.D. Vance (R-Ohio) has apparently gotten involved after sending a January letter to Treasury Secretary Janet Yellen raising concerns over the deal. Vance’s letter accuses CSG of “a long record of wrongdoing” and “well-documented connections to American adversaries.” It went on to accuse CSG of dealing with Russia’s Vladimir Putin as well as violating international arms embargoes.

That, it seems, was a bridge too far for CSG owner and CEO Michal Strnad. Yesterday,  Strnad sent an open letter to Vance, saying he was “shocked by the false accusations.”

“Senator,” the letter reads, “with all due respect, your assessment of us was profoundly mistaken. CSG is one of the most important private supporters of the Ukrainian military effort, a country to which we have supplied much-needed weapons systems dating back to 2018, well before the outbreak of open Russian aggression.”

“CSG Group companies,” the letter continues, “are also suppliers to the U.S. military and have a significant history of cooperation with major American defense industry corporations.”

“Any speculation about the CSG’s connection to the Putin regime,” Strnad wrote, “should be considered nonsense.”

For the record, CSG stopped supplying trucks to Russia’s mining industry after the Ukrainian invasion. CSG, it says, has never been investigated, much less sanctioned, for violating any arms embargoes.

The letter then says the most convincing argument is “one you can experience yourself” and invites Vance to visit “CSG member companies in the U.S. and Europe to experience first-hand who we really are.”

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Late yesterday, CSG took aim at another group opposing their acquisition: the National Sheriff’s Association.

That organization sent an April 9 letter to the Attorney General and Homeland Security Secretaries expressing their concern-if not outright opposition- to the CSG/Kinetic acquisition.

The Sheriffs Association had expressed concerns that the acquisition could cause a “disruption in access to affordable and reliable American-made ammunition and primers.”

CSG’s ammunition division CEO David Stepan responded that his company had “publicly stated our pledge to maintain Vista’s manufacturing operations in the United States, led by the same topflight American management team that runs its operation today.”

“We have no plans,” Stepan wrote, “to move any employment or production overseas.”

He also reminded Association Executive Director and CEO Jonathan F. Thompson that foreign ownership, including Fiocchi (now majority-owned by CSG) and South Korean ammunition maker PMC, both sell to U.S. law enforcement.

His response to the “trepidations” members might feel regarding CSG’s relationships with U.S. adversaries in unmistakable terms:

The short answer is, we have no ties. CSG is among the top providers of artillery ammunition for NATO and recently announced we intend to invest several hundred million dollars in our ongoing efforts to bolster Ukraine’s defense capabilities by expanding our supply of artillery ammunition, tanks and artillery systems in the country.

“All of us,” Stepan concluded, “at CSG are committed to transparency. We are also committed to doing what’s best for all our future customers in the United States.”

Having met and spoken at length with CSG officials, I have found there’s very little they won’t discuss. Those discussions with them revealed why companies like CZ and CSG are interested in U.S. businesses.

If you’re in the civilian firearms or ammunition business, the U.S. is the one place globally where the firearms market is actually expanding.

As to MNC, there’s very little information available. As the Gordon Hackett report stated, “Other than seeing it described as a Dallas-based family office, details on MNC are in short supply.”

Today, as on March 26, the MNC website is nothing more than a landing page. Other than Gottfredson, who was a member of Vista’s Board of Directors until January, little else is known. Nothing else is being offered.

We’re watching and, as always, we’ll keep you posted.

— Jim Shepherd the www.theoutdoorwire.com

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