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CSG, owned by Czech entrepreneur Michal Strnad, continues its remarkable growth trajectory by acquiring IFF’s nitrocellulose business, including the production plant and the Walsrode Industrial Park in Lower Saxony, Germany. This strategic acquisition, signed in early October, underscores CSG’s aggressive expansion strategy and its commitment to addressing critical industry needs. While the transaction price remains undisclosed, it is reported to be in the hundreds of millions of euros.
Record-Breaking Growth and Strategic Acquisitions
Last year, CSG achieved record revenues of nearly 42 billion CZK, marking a 71% increase compared to 2022. In the first half of this year alone, CSG reported revenues of 40 billion CZK, highlighting the company’s robust growth and Michal Strnad’s relentless pursuit of strategic acquisitions to drive further expansion. Strnad’s vision for CSG is clear: to create a vertically integrated production ecosystem that efficiently addresses market demands and industry challenges.
Acquisition Details and Strategic Importance
MSM Group, the Slovak subsidiary of CSG, has entered into a purchase agreement with U.S.-based IFF to acquire its nitrocellulose business, associated production plant, and the Walsrode Industrial Park. The 1.7-square-kilometer industrial park, located near Walsrode, Germany, has a long-standing tradition in the chemical industry and houses several companies from various sectors. The acquisition includes not only the nitrocellulose production but also the entire industrial park, which features its own railway siding and a cogeneration power plant. Over 350 employees from the acquired facilities will join CSG.
Under IFF’s management, the facility produced nitrocellulose exclusively for industrial purposes, primarily serving customers in coatings and printing inks. CSG plans to maintain these supply chains to civil-sector clients while expanding production to include energetic nitrocellulose for large-caliber ammunition. This strategic move aligns with CSG’s efforts to establish a vertically integrated ammunition production line, addressing the global shortage exacerbated by the conflict in Ukraine.
Leadership and Vision
Jan Marinov, CEO of the CSG Defence Division, emphasized the strategic importance of this acquisition:
“Chemical production at the Walsrode Industrial Park has historically included products for military purposes. Even in today’s challenging environment—where the European chemical industry faces high energy costs and stringent regulations—the production of nitrocellulose for the ammunition industry and other vital sectors like printing inks and coatings can offer long-term prospects for companies in this field. Energetic nitrocellulose is strategically crucial for the security of NATO and EU countries and their allies. Europe must avoid dependency on imports of such strategic commodities to ensure supply security, especially during crises.”
Michal Strnad, owner and CEO of CSG, added:
“A significant security threat for NATO countries and their allies is the insufficient European capacity for ammunition production, especially large-caliber types. This acquisition significantly brings us closer to our goal of establishing a fully integrated production line within CSG. Moreover, it marks our entry as a manufacturer and employer in Germany, a key economic partner for the Czech Republic.”
Addressing Industry Shortages and Enhancing Security
Nitrocellulose is a fundamental component in the manufacture of explosives and propellants. CSG’s acquisition addresses a critical global shortage of these materials, driven by increasing demand for large-caliber ammunition for tanks and artillery, particularly due to ongoing geopolitical tensions. Previously, CSG and the Czech defense group STV Group proposed investing in expanding capacities at the state-owned company Explosia, a major European producer of explosives and propellants, but these efforts did not materialize.
Future Prospects and Investment
CSG values the industrial production capabilities and customer base of the Walsrode plant and intends to leverage this to include energetic nitrocellulose production, consistent with its other businesses. This expansion will require further investments in the facilities and consultations with relevant regulatory authorities. The completion of the transaction is expected in the first half of 2025, subject to customary closing conditions, including regulatory approvals.
Strengthening European Defense Autonomy
By securing its own nitrocellulose production facility, CSG not only enhances its production capabilities but also contributes to the strategic autonomy of European defense manufacturing. This move reduces reliance on external suppliers and ensures a stable supply of critical materials necessary for national and allied security.
Edited: Katerina Urbanova
Photo credit: CSG