This is a ray of light in alot of bad news generally.
I'd love to pick up a CZ based colt.
Can't wait.
This is a ray of light in alot of bad news generally.
I'd love to pick up a CZ based colt.
Can't wait.
Originally Posted by Whirlwind06
It's not entirely accurate.
The deal is for $220 million + 1.1 million shares of CZ Group Stock (traded on the Czech Republic market exchange). Which yesterday were valued at around $17/share for an addition 19-20 million. To make the deal 220 million in cash consideration + 20 million in stock options.
And the deal contains a provision for an additional 1.1 million shares of CZG if sales targets are met between 2021-2023. Which conceivably could make this a very lucrative deal. CZ had an IPO late last year of around $14/share. If they are successful in acquiring the Canadian Military contract (which I think they will), then I wouldn't be surprised to see $20/share.
The latter portion of the deal makes it sound is if CZG isn't planning to dramatically alter the management structure of Colt. But that might not be the case, it might be a case of, "If what you've sold us is as good as you claim, we'll chip in a bonus." No idea, I hope they're planning on implementing dramatic managerial changes at Colt and ousting the whole board of directors. I have no idea and the details of the deal are unlikely to be published until the late 2nd Q of this year. I also have no idea about the details/reports issued by CZG to stock holders and/or what the legal requirements for transparency/reporting of deals are for the Czech market exchange vs. our own. If privacy laws are stronger there, we may never see any details beyond the basic reporting of the price.
In case anyone is wondering: The Prague Stock Exchange (PSE) is where CZ Group (CZG) is traded - https://www.pse.cz/en/detail/CZ0009008942
Last edited by RevolverRob; 02-12-2021 at 01:17 PM.
I saw the stock component, but it still seems tiny to me. As was pointed out up thread, total deal value would need to include Colt's debt so that could swing the valuation up quite a bit, but i was surprised to see it in the low-hundred millions.
Colt has fairly minimal debt holdings at the moment, due to the recent emergence from bankruptcy. It also has fairly minimal military contract holdings overall.
It's value is in its Brand Trademark holdings, plus the ability to meet manufacturing needs and the ability to pursue new mil/le contracts. I say that, because the only genuine IP Colt owns these days are the new designs in the revolver line. Everything else is a legacy line in which the patents and trademarks for IP are long expired (think about it, they build 1911s and AR15s...).
So at this point, Colt's genuine value is actually quite low. Because there isn't any significant intellectual property holdings from the firm. You're buying machines, the brand name, and a few contracts. In fact, the value of Colt Holdings is probably more Colt Canada at this point than the US holdings, given the depletion of US Military contracts. Colt really isn't a profitable company and hasn't been for some time. The way its stayed afloat is through regular injections of bond dollars and subsequent bankruptcy to disavow that debt.
Realistically, CZG bought Colt to pursue military contracts in North America AND with the hopes that it can profit off of the name to some degree.
That's the only reason that makes sense to me. I don't see what Colt brings to the equation other than that.
“There is no growth in the comfort zone.”--Jocko Willink
"You can never have too many knives." --Joe Ambercrombie
I mean that's pretty much it.
As I alluded to in the recent spin-off of the Canadian P320 thing. I believe this was a very strategic move by CZ to acquire Colt Canada more that Colt 'USA'. They're thinking, "Canadian Pistol Contract" in the short-term. That the overall goal was not to acquire a maker of 1911s (I mean CZ owns a better 1911 company anyways). They're thinking long-term about the ability to supply the Canadian military with substantial weapons systems, since Canada wants to 'buy Canadian' and Colt Canada is their only real manufacturing group.
It's also a smart move, because things manufactured in Canada, that are IP from CZG in Czech Republic, won't be subject to ITAR restrictions. Which means you could see 'Colt' Canada grow by leaps and bounds and start selling weapons to groups in Asia that a US-based Colt simply cannot do. Meanwhile Colt 'USA' can continue to pursue military and LE contracts within the US and anywhere that ITAR doesn't restrict shipping.
Colt MFG/Holdings as a US-based company was subject to ITAR even for its Canadian company. But CZ Group will not be limited by such restrictions and can treat Colt Canada and Colt 'USA' as separate companies, in effect. Allowing them both to serve as firearms importation/exportation groups for different sets of clients.
I'll hand it to those sneaky Czechs, it was a smart move. And rather than buy a German company like HK or Walther, they steered wide of Germany. The additional reality that HK/Glock/Walther have the entire western European market locked up meant CZ really needs to diversify itself elsewhere in other ways, if it couldn't acquire one of those firms.
ColtZ
In the P-F basket of deplorables.
Which would be a shame, because they do some seriously good work. I've owned a number of Colt Custom Shop 1911s and all have been just great in terms of build quality and performance. And I'm talking about the cataloged models that are hand built by CCS, not full house bespoke customs.
Maybe the DWX and DWXC will be the first guns with the Colt brand on the side...
The Colt X and Colt X Compact has a nice ring to it.
Colt 1911-20x and Colt 1911-15x - named after the capacity? But also a play on bullseye scoring that includes the score plus total number of Xs?
I might have to have one just to see if they have the same quality as their rifles. Wouldn't that be a pleasant surprise?
In the P-F basket of deplorables.
Reply With Quote