Colt CZ Group SE is purchasing the Pardubice-based company Synthesia Nitrocellulose, which produces something essential for every bullet – nitrocellulose. This raw material forms the basis of all gunpowder, and there are only a handful of manufacturers worldwide. What does this acquisition mean for the Czech defense industry and the group’s position in the global market?
How Colt CZ Gains Control Over Strategic Raw Materials
Nitrocellulose is an indispensable raw material in gunpowder and ammunition production. Its manufacturing belongs among highly specialized activities with a limited number of global suppliers. Colt CZ thus gains direct control over a critical element of its production chain.
Acquisition benefits include:
- Elimination of dependence on external nitrocellulose suppliers
- More stable costs for key input materials
- Resistance to price fluctuations on global markets
- Opportunity to optimize production processes across the group
Jan Drahota, Chairman of the Board at Colt CZ, described the transaction as a step strengthening the self-sufficiency of both the group and the Czech Republic within NATO. This vertical integration – a strategy of controlling multiple parts of the production process from raw materials to final products – is becoming crucial for defense companies’ competitiveness.
Colt CZ’s 22 Billion Acquisition Financing Structure
The first phase will give Colt CZ a majority 51% stake through a combination of cash and newly issued shares. Simultaneously, the group will acquire Synthesia’s energy division for 1.4 billion crowns, paying exclusively through new share issuance.
Transaction structure:
- 51% stake in Synthesia Nitrocellulose for a combination of cash and shares
- Energy division for 1.4 billion crowns in shares
- The remaining 49% will be acquired in the second phase under predetermined conditions
- Completion of the first phase by the end of Q1 2026 following regulatory approval
The total price corresponds to 8.2 times the expected EBITDA (earnings before interest, taxes, depreciation, and amortization) for 2025. For comparison – average valuations for similar industrial acquisitions range between 6-10 times EBITDA, making this defense company purchase attractively priced.
Kaprain Brings Industrial Expertise and Capital
Synthesia’s current owner, investor group Kaprain led by entrepreneur Karel Pražák, will become the third-largest shareholder in Colt CZ Group. Kaprain has extensive experience managing chemical and industrial companies, which could accelerate the integration of the Pardubice-based company.
Synthesia is one of the few European producers of military-grade nitrocellulose. Market alternatives are limited – most production is concentrated in the USA and China. The entry of an experienced industrial investor among shareholders brings not only capital but also expertise in chemical technologies.
Defense Industry Investment Continues Across the Atlantic
Synthesia fits into Colt CZ’s broader vertical integration strategy. The group is simultaneously negotiating the acquisition of American Vista Outdoor for $1.7 billion. The combination of both acquisitions would create a global player with control over the entire production chain from strategic raw materials to distribution.
The group’s current structure includes manufacturing facilities in the Czech Republic, USA, Canada, Sweden, Switzerland, and Hungary with four thousand employees. The brand portfolio consists of the world-famous Colt, Zbrojovka Uherský Brod, American Dan Wesson, and Vlašim-based ammunition manufacturer Sellier & Bellot.
Financial Reality in the Context of Growth Ambitions
Colt CZ’s nine-month EBITDA declined 17% year-over-year to 1.9 billion crowns due to slower recovery in the US commercial market. Despite this decline, the group maintains sufficient financial resources to execute large-scale acquisitions, as evidenced by the Synthesia acquisition and ongoing Vista Outdoor negotiations.
Key financial indicators:
- EBITDA for 9 months: 1.9 billion crowns (-17% year-over-year)
- Synthesia valuation: 8.2 times 2025 EBITDA
- Synthesia acquisition value: 22 billion crowns
Control over nitrocellulose production may stabilize operating margins and reduce risks associated with strategic raw material price volatility in the medium term. Analysts will monitor how quickly new production capacities can be integrated into existing processes.
Control over nitrocellulose production represents a strategic advantage during a period of growing ammunition demand in Europe and North America. The Synthesia acquisition thus strengthens Colt CZ’s position as an independent global player within the Czech defense industry, capable of controlling key parts of its supply chain.
