Czech-headquartered firearms manufacturer Colt CZ Group SE announced on Friday that it has reached an agreement to acquire Czech nitrocellulose producer Synthesia Nitrocellulose in a two-stage transaction, valuing the target company at 22 billion Czech crowns (approximately $1.05 billion).

Colt Group, which operates in the United States, Canada, Sweden, Switzerland, and Hungary, stated that this acquisition from privately-held chemical group Synthesia will help secure its supply chain stability and support expansion into the high-demand large-caliber firearms and ammunition business.

Nitrocellulose serves as a critical raw material required for ammunition production.

Jan Drahota, Chairman of Colt Group, said in a statement: "This acquisition aligns with the group's strategy to expand operations into medium and large-caliber ammunition sectors, while strengthening our position in critical supply chain components."

"We plan to continue advancing vertical integration in ammunition manufacturing operations, thereby supporting strategic independence and self-sufficiency capabilities for the Czech Republic and NATO member countries in defense material supply."

Colt Group indicated that in the first phase of the acquisition, the company will acquire a 51% stake in the target enterprise through a "cash plus equity" structure. This transaction is subject to regulatory approval, expected to be completed by the end of the first quarter of 2026.

The statement also mentioned that approximately 40% of the first-phase transaction will be paid in new shares, and upon completion, Synthesia's parent company Kaprain Group will become Colt Group's third-largest shareholder.

The remaining equity stake will be acquired "in the medium term."

Colt Group stated that the total transaction valuation of 22 billion Czech crowns (calculated on enterprise value basis) represents approximately 8.2 times the target company's expected 2025 core earnings.

Additionally, Colt Group will also acquire Synthesia's power production business, with this portion of the transaction having an enterprise value of 1.4 billion Czech crowns, to be paid entirely in new Colt Group shares.