Post by pbr on Apr 6, 2007 6:28:57 GMT -5
Remington to Be Bought by Cerberus for $118 Million
(Update6)
By Danielle Kost
April 5 (Bloomberg) -- Remington Arms Co., the gunmaker that has equipped
U.S. soldiers for 150 years, agreed to be acquired by private-equity firm
Cerberus Capital Management LP for $118 million.
The company, based in Madison, North Carolina, produced its first profit in
three years in 2006 after struggling with rising materials costs and
increased competition from Smith & Wesson Holding Corp., maker of the .44
Magnum used in the ``Dirty Harry'' movies. Remington was sold by New
York-based private- equity firms Bruckmann, Rosser, Sherrill & Co. and
Clayton Dubilier & Rice Co., according to a company statement today.
Cerberus is entering the $2.1 billion U.S. firearms industry, whose sales
grew 2.6 percent, or by 4.7 million guns, in 2005, the most recent data from
the Treasury Department show. American residents own 290 million guns, and
Remington is the country's largest and oldest maker of rifles and shotguns.
Cerberus is ``getting a brand that has leadership in the rifle market,''
said Cai Von Rumohr, a Boston-based analyst at Cowen & Co. who follows Smith
& Wesson.
Remington's management, led by Chief Executive Officer Thomas Millner, will
remain in place, company spokesman Al Russo said.
Remington was founded in 1816 by Eliphalet Remington II, who built his
flintlock rifle in Ilion Gulch, New York, after placing second in a shooting
match and attracting the attention of other contestants. The company was
rescued by the U.S. government after Russian revolutionaries defaulted on a
contract in 1918 and benefited from its purchase during the Great Depression
by DuPont Co., which made improvements to gun powder.
Winchester Rifles
Von Rumohr said Remington may be able to gain market share after U.S.
Repeating Arms Co., which licenses the Winchester brand, discontinued three
models and closed a factory in New Haven, Connecticut, where the rifles and
shotguns were made for a century and a half.
The Remington transaction includes $252 million of debt. Cerberus
spokeswoman JJ Rissi declined to comment on the deal's financial breakdown.
Remington stopped making handguns in the 1990s. Stricter federal and state
laws governing the sale of pistols prompted gun manufacturers to narrow
their focus on shotguns and rifles used for hunting and target shooting. The
company's guns include the $812 700 BDL Custom Deluxe and $996 11-87 SPS
Super Magnum.
In December, Smith & Wesson agreed to buy Thompson/Center Arms Inc. for $102
million to enter the hunting-rifle market. Springfield, Massachusetts-based
Smith & Wesson, whose revenue is about half that of Remington, is known for
its revolvers and pistols.
$300,000 Profit
Last year, Remington posted net income of $300,000 after three years of
losses. Sales rose 8.7 percent to $446 million. Smith & Wesson last month
said it anticipates earning $12 million on $225 million of sales in fiscal
2007. Remington had 2,150 employees at the end of February.
Bruckmann, Rosser, Sherrill owns 61.3 percent of Remington, and Clayton
Dubilier & Rice holds 13 percent and controls 26.6 percent of the voting
power.
Clayton Dubilier bought Remington's assets from DuPont in 1993 for $300
million. The Wilmington, Delaware-based chemical company purchased a 60
percent stake in the gunmaker in 1933 and acquired the remaining shares in
1980. During its 191-year history, Remington branched out to produce
typewriters, sewing machines and cash registers, businesses it later
divested.
Cerberus's acquisition adds to one of the busiest years for buyouts. The
value of announced leveraged buyouts jumped 40 percent to $188 billion
during the first quarter, led by the record $44.1 billion agreement to
acquire Dallas-based power producer TXU Corp., data compiled by Bloomberg
show.
Remington expects to complete the transaction by June 28. Credit Suisse
Group advised New York-based Cerberus, which manages $23.5 billion.
To contact the reporter on this story: Danielle Kost in Boston at
dkost1@bloomberg.net .
Last Updated: April 5, 2007 16:40 EDT
(Update6)
By Danielle Kost
April 5 (Bloomberg) -- Remington Arms Co., the gunmaker that has equipped
U.S. soldiers for 150 years, agreed to be acquired by private-equity firm
Cerberus Capital Management LP for $118 million.
The company, based in Madison, North Carolina, produced its first profit in
three years in 2006 after struggling with rising materials costs and
increased competition from Smith & Wesson Holding Corp., maker of the .44
Magnum used in the ``Dirty Harry'' movies. Remington was sold by New
York-based private- equity firms Bruckmann, Rosser, Sherrill & Co. and
Clayton Dubilier & Rice Co., according to a company statement today.
Cerberus is entering the $2.1 billion U.S. firearms industry, whose sales
grew 2.6 percent, or by 4.7 million guns, in 2005, the most recent data from
the Treasury Department show. American residents own 290 million guns, and
Remington is the country's largest and oldest maker of rifles and shotguns.
Cerberus is ``getting a brand that has leadership in the rifle market,''
said Cai Von Rumohr, a Boston-based analyst at Cowen & Co. who follows Smith
& Wesson.
Remington's management, led by Chief Executive Officer Thomas Millner, will
remain in place, company spokesman Al Russo said.
Remington was founded in 1816 by Eliphalet Remington II, who built his
flintlock rifle in Ilion Gulch, New York, after placing second in a shooting
match and attracting the attention of other contestants. The company was
rescued by the U.S. government after Russian revolutionaries defaulted on a
contract in 1918 and benefited from its purchase during the Great Depression
by DuPont Co., which made improvements to gun powder.
Winchester Rifles
Von Rumohr said Remington may be able to gain market share after U.S.
Repeating Arms Co., which licenses the Winchester brand, discontinued three
models and closed a factory in New Haven, Connecticut, where the rifles and
shotguns were made for a century and a half.
The Remington transaction includes $252 million of debt. Cerberus
spokeswoman JJ Rissi declined to comment on the deal's financial breakdown.
Remington stopped making handguns in the 1990s. Stricter federal and state
laws governing the sale of pistols prompted gun manufacturers to narrow
their focus on shotguns and rifles used for hunting and target shooting. The
company's guns include the $812 700 BDL Custom Deluxe and $996 11-87 SPS
Super Magnum.
In December, Smith & Wesson agreed to buy Thompson/Center Arms Inc. for $102
million to enter the hunting-rifle market. Springfield, Massachusetts-based
Smith & Wesson, whose revenue is about half that of Remington, is known for
its revolvers and pistols.
$300,000 Profit
Last year, Remington posted net income of $300,000 after three years of
losses. Sales rose 8.7 percent to $446 million. Smith & Wesson last month
said it anticipates earning $12 million on $225 million of sales in fiscal
2007. Remington had 2,150 employees at the end of February.
Bruckmann, Rosser, Sherrill owns 61.3 percent of Remington, and Clayton
Dubilier & Rice holds 13 percent and controls 26.6 percent of the voting
power.
Clayton Dubilier bought Remington's assets from DuPont in 1993 for $300
million. The Wilmington, Delaware-based chemical company purchased a 60
percent stake in the gunmaker in 1933 and acquired the remaining shares in
1980. During its 191-year history, Remington branched out to produce
typewriters, sewing machines and cash registers, businesses it later
divested.
Cerberus's acquisition adds to one of the busiest years for buyouts. The
value of announced leveraged buyouts jumped 40 percent to $188 billion
during the first quarter, led by the record $44.1 billion agreement to
acquire Dallas-based power producer TXU Corp., data compiled by Bloomberg
show.
Remington expects to complete the transaction by June 28. Credit Suisse
Group advised New York-based Cerberus, which manages $23.5 billion.
To contact the reporter on this story: Danielle Kost in Boston at
dkost1@bloomberg.net .
Last Updated: April 5, 2007 16:40 EDT
