In 1919, two years after Finland declared independence from the Russian Empire, the Suojeluskuntain Yliesikunnan Asepaja (Civil Guard Supreme Staff Gun Works) opened in a former Helsinki brewery to repair private arms and recondition Russian military rifles for Finnish service. The rifle repair shop became financially independent of the civil guard in 1921. The Suojeluskuntain Yliesikunnan Asepaja moved from Helsinki to an ammunition factory in Riihimäki on 1 June 1927 and reorganized as SAKO in the 1930s. Sako started exporting pistol cartridges to Sweden in the 1930s and continued manufacturing submachine gun cartridges through World War II.

Another Finnish firearms manufacturer Tikkakoski, which owned the Tikka brand, was merged into SAKO in 1983. In 1986, the arms manufacturing division of the government-owned Valmet conglomerate (what itself had been derived from the Valtion Kivääritehdas, VKT) was merged with Sako and called Sako-Valmet, with ownership split evenly between Nokia and Valmet. After further organizational shifts in state ownership, the company was sold to the Italian Beretta Holding in 2000.

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