Smith & Wesson Holding Corporation to Acquire Battenfeld Technologies, Inc.

[Joe P. 4]

Smith & Wesson Holding Corporation to Acquire Battenfeld Technologies, Inc.

 

Acquisition Will Provide Broad, Established Platform For Firearm Accessories

Business

 

PR Newswire

 

SPRINGFIELD, Mass., Nov. 26, 2014

 

SPRINGFIELD, Mass., Nov. 26, 2014 /PRNewswire/ -- Smith & Wesson Holding

Corporation (NASDAQ Global Select: SWHC), a leader in firearm manufacturing

and design, today announced that it has signed a definitive agreement to

acquire Battenfeld Technologies, Inc., an industry-leading provider of hunting

and shooting accessories.  The acquisition, which is expected to be accretive

to Smith & Wesson gross margins, earnings per share, and cash generated in

fiscal 2016, is expected to close in mid- to late December.

 

Smith & Wesson Logo

 

The agreement provides for Smith & Wesson to acquire Battenfeld Technologies

for $130.5 million in cash, subject to certain adjustments. Based in a 145,000

square foot facility in Columbia, Missouri, Battenfeld Technologies develops

and sells shooting, reloading, gunsmithing, and gun cleaning supplies under

several popular, premium brands, including Caldwell® Shooting Supplies,

Wheeler® Engineering, Tipton® Gun Cleaning Supplies, and Lockdown® Vault

Accessories.

 

Battenfeld Technologies maintains a product development team that has an

established track record of launching high-quality, innovative products across

its brand portfolio.  As a result, its products maintain a prominent position

with several independent retailers as well as large sporting goods retailers,

including Cabela's, Bass Pro Shops, Dick's Sporting Goods, and Gander

Mountain.  Battenfeld products are also available at internet retailers,

including amazon.com and MidwayUSA.

 

Battenfeld Technologies was founded 22 years ago and since 2006 has generated

a largely organic compound annual revenue growth rate in excess of 18%, fueled

by sales of newly developed products.  In addition to this strong organic

growth, the company has also expanded by successfully acquiring small,

specialty, hunting-related accessories companies, such as BOG-POD® and

GoldenRod®. 

 

James Debney, Smith & Wesson President and CEO, said, "Battenfeld Technologies

provides us with a unique opportunity to acquire a thriving company that fits

perfectly within our core firearm business.  It also allows us to move more

strongly into the hunting vertical as well as establish a strong platform for

growth in our existing firearm accessories business, which has been a small

but highly profitable part of our company.  Most of the growth of Battenfeld

Technologies has occurred organically, which is a testament to the robust

product development capability that Jim Gianladis, the Chief Executive Officer

of Battenfeld Technologies, and his team have established.  That capability,

combined with Battenfeld Technologies' sophisticated sourcing and distribution

infrastructure, should provide a solid framework for organic and inorganic

growth as the new accessories division of Smith & Wesson.  Our intention is

that eventually all existing Smith & Wesson®, M&P®, and Thompson/Center Arms™

accessories will be housed within this new division.  As we continue to expand

further into the hunting category, we expect that our accessories businesses

will benefit from Battenfeld Technologies' sourcing and distribution

efficiencies and established expertise in new product development."

 

Jim Gianladis, who joined Battenfeld in 2007, will serve as the President of

Battenfeld Technologies and will report directly to Debney.  The Battenfeld

Technologies management team and workforce, as well as its base of operations,

will continue in Columbia, Missouri.  Gianladis said, "We are very excited to

join the team at Smith & Wesson.  At Battenfeld Technologies, we have built a

robust hunting and accessories business based upon our premium product quality

and innovation. We believe that makes us a perfect fit for Smith & Wesson, a

legendary company with an iconic brand, world-class products, and broad

markets that span consumer, law enforcement, and international channels. 

Together, we have the opportunity to further expand our business and achieve a

new level of success." 

 

The purchase price for Battenfeld Technologies will be paid using existing

cash balances and cash from a $100 million draw on Smith & Wesson's existing

line of credit, which has been expanded to $125 million as a result of the

company's partial exercise of the accordion feature on that line of credit.

Battenfeld Technologies is being acquired from Clearview Capital, a private

equity firm based in Connecticut. 

 

Due to its anticipated timing, the transaction is expected to have nominal

impact on Smith & Wesson's operational and financial results for the fiscal

2015 third quarter ending January 31, 2015.  Without considering any revenue

synergies, Smith & Wesson estimates that the acquisition will provide

incremental revenue in its 2016 fiscal year in excess of $55 million and

EBITDA margins on the incremental revenue in excess of 27%.  The acquisition

is also expected to be accretive to Smith & Wesson gross margins, earnings per

share, and cash generated in fiscal 2016.  Smith & Wesson will provide

additional details and an update on the progress of the transaction during its

fiscal second quarter earnings conference call, scheduled for December 4,

2014.  Details of the conference call follow.

 

Cowen and Company, LLC is acting as exclusive financial advisor and Greenberg

Traurig, LLP is acting as legal advisor to Smith & Wesson and its Board of

Directors.  Robert W. Baird & Co. is acting as exclusive financial advisor and

Loeb and Loeb, LLP is acting as legal advisor to Battenfeld Technologies, Inc.

and its owner.

 

Conference Call and Webcast

 

The company will host a conference call and webcast on December 4, 2014, to

discuss its second quarter fiscal 2015 financial and operational results.

Speakers on the conference call will include James Debney, President and Chief

Executive Officer, and Jeffrey D. Buchanan, Executive Vice President and Chief

Financial Officer. The conference call may include forward-looking statements.

The conference call and webcast will begin at 5:00 p.m. Eastern Time (2:00

p.m. Pacific Time). Those interested in listening to the conference call via

telephone may call directly at 857-244-7308 and reference conference code

44133134.  No RSVP is necessary.  The conference call audio webcast can also

be accessed live and for replay on the company's website at

www.smith-wesson.com, under the Investor Relations section. The company will

maintain an audio replay of this conference call on its website for a period

of time after the call. No other audio replay will be available. 

 

[Krdshrk 3,877]

FYI.  That's the parent company of Caldwell Shooting Supplies, Tipton Cleaning SUpplies, Frankford Arsenal, Wheeler Engineering, etc.

[Joe P. 4]

Yes , and quite a few others apparently ... thought this was interesting : 

 

Our intention is
that eventually all existing Smith & Wesson®, M&P®, and Thompson/Center Arms™
accessories will be housed within this new division.  As we continue to expand
further into the hunting category, we expect that our accessories businesses
will benefit from Battenfeld Technologies' 

[Candyman87 10]

Sounds like they're just moving the accessories business down there and keeping the firearms at home where they can focus on it.

 

Seems like a good move to me. Will be interesting to see how it pans out.