Tomkins PLC, the British conglomerate that lists Smith & Wesson among its U.S. holdings, has taken the first steps toward purchasing Remington Arms Company, according to widespread market reports.
Tomkins would not comment on what, if any, interest it has in Remington, but market observers suggested that it is probably too early in the game for anyone to have signed letters of intent or a definitive agreement to buy the long gun, ammunition and fishing tackle manufacturer. Goldman, Sachs & Company, which is conducting the “strategic review” for Remington has asked potential suitors to sign confidentiality agreements before receiving an offering memorandum. The companies are then to submit preliminary, non-binding indications of interest and an estimate of Remington’s value.
Many market observers believe a deal that essentially combined Remington and Smith & Wesson would be a good one for both companies. It could be especially beneficial for S&W, because it would immediately move the handgun manufacturer into the long gun business, which is a strong area for its staunchest competitor, Sturm, Ruger & Company.
Tomkins’ investment strategy, outlined in the company’s review of its fiscal year results, gives mixed indications as to which direction it might take regarding a Remington purchase. Tomkins purchased five companies, all in its industrial and automotive engineering and food groups, during the year while selling 15 operations.
The conglomerate says its plan is “to focus on and build a limited number of key strategic manufacturing business activities with potential for long term growth, both organic and by add-on acquisition. Our concentration is on a small number of business sectors each characterized by common customers, markets, products and technologies.” Remington and Smith & Wesson certainly meet that criteria.
On the other hand, Tomkins’ Professional, Garden & Leisure Products unit that includes Smith & Wesson has not performed well in recent years, accounting for just 4.7 percent of operating profit in 1997-98. Tomkins says the “future of this sector is under review,” which has fueled rumors for the last couple of years that Smith & Wesson is for sale. If that is the case, it would seem unlikely that Tomkins would be seeking add-ons for the group.
Gibbs Rifle, Navy Arms Cancel Merger Plans
A planned merger of Gibbs Rifle Company and Navy Arms, Inc., scheduled to take place July 1, has been canceled.
Gibbs president Val Forgett III said the plan to consolidate his company with Navy, owned by his father Val Forgett, was called off when they could not resolve “differences of opinion as to the strategic direction the combined company would take. We decided that we would be best served by keeping the firms separate.”
The canceled deal would have created one of the larger surplus firearms and ammunition companies in the business, but there should be few changes in either firm’s approach to the market. Gibbs is dropping out of the cowboy action shooting market that it entered earlier this year with a line of lever action rifles made by Brazilian manufacturer Amadeo Rossi and a Schofield pistol. The firm plans to concentrate its efforts on the Mauser 98 sporting rifle and other surplus guns and ammunition.
NY Cops Plan To Switch To Hollow Point Ammo
The New York City Police Department plans to switch to hollow point ammunition from its traditional full metal jacket rounds within the next couple of months.
The city has not yet put the ammunition contract up for bids.
