PRAGUE (Reuters) -Czech-based firearms maker Colt CZ Group SE has agreed to buy Czech nitrocellulose maker Synthesia Nitrocellulose in two stages in a transaction valuing the target at 22 billion crowns ($1.05 billion), Colt said on Friday.

Colt, which also has operations in the United States, Canada, Sweden, Switzerland and Hungary, said the acquisition from privately owned chemicals group Synthesia would help to secure its supply chain and expansion into larger calibres in high demand.

Nitrocellulose is a raw material needed for ammunition production.

"The acquisition ... fits into our strategy of expanding the group's activities into medium and large-calibre ammunition while strengthening our position in a critical element of our supply chain," Colt Chairman Jan Drahota said in a statement.

"We intend to continue the vertical integration of ammunition manufacturing, thereby contributing to the strategic independence and self-sufficiency of the Czech Republic and NATO countries in defence supplies."

In the first stage, Colt will take 51% stake in a cash-and-shares deal to be settled after regulatory approvals expected by the end of the first quarter of 2026, it said.

The portion of the first stage of the deal covered with new shares will be about 40%, making Synthesia owner Kaprain, the third largest shareholder in Colt, it said.

The remaining stake will be purchased in "the medium term", it added.

The total transaction price of 22 billion crowns, based on enterprise value, corresponds to about 8.2 times expected 2025 core profit, Colt said.

Colt also said it will acquire Synthesia's power production business in a deal with an enterprise value of 1.4 billion crowns, to be paid entirely through new Colt shares.

($1 = 20.9570 Czech crowns)