Remington Sale - Part 2

The word about the sale of Remington to Cerebus Capital Management is beginning to trickle down ... slowly.

There's a thread on "The High Road" which offers some more information.

That information is, admittedly, third-hand.

Although I am reluctant to do so, in my hunger for more information I am thrown back on today's expanded article from The Shooting Wire [subscription here] to expand the free access of data.

Note that I'm not reluctant to cite The Shooting Wire; I'm just reluctant to take advantage of their Industry Insider status. Unfortunately they do not provide either links to source data or a link to a place where I can request permission to quote from them. I rely on current copyright law which (generally) allows quotes for the purpose of comment on the posts. I take this opportunity to point out that all comments from The Shooting Wire are available only because they have generously declined to protest my quotes.

Or this blog hasn't breached their attention horizon, which is probably more likely.

Finally, I'm concerned that this information is also possibly 'third-hand' and at least 'second-hand' (derived from an unquoted source).

To continue quoting from The Shooting Wire:

With yesterday's announcement that Cerebus Capital Management, L.P. had finalized the deal to acquire Remington Arms, a company best known for owning airlines (Air Canada), car rental companies (Alamo and National), a bus manufacturer (Bluebird), and banks and lending institutions in Germany, Israel and Japan became an instant player in the firearms industry.

With their acquisition of Bushmaster, Cerebus already was firmly ensconced in the "black rifle" industry. By acquiring Remington, they have a significant presence in every area of the firearms industry - except handguns.

Some industry figures are already whispering likely candidates to fill what one wag calls "the final space in the Cerebus gun safe".

The deal itself doesn't really take Remington in a new ownership direction. Remington was already owned by two New York private equity firms, Bruckmann, Rosser, Sherrill & Company, and Clayton Dubilier & Rice. 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.

The question that immediately comes to mind is whether the Cerebus group will consider a bid on Colt's civilian division. This would give them the 'Full Monty" in the sense that they will lock in both long-gun and handgun manufacture.

Also, I'm grateful to The Shooting Wire for having performed the acquisition history of Remington Repeating Firearms company.

Considering the imperative to get this information out to the folks who are interested (you!), I haven't yet fully researched the citations included in the quote.

However, a search of Claytton Dubilier & Rice provides only a list (wait for it, if you click on the link ... it takes a minute to load) of recent acquisitions.

A search on Bruckmann, Rosser, Sherrill & Company ("BBS:) yields even less immediate information. Sorry. Research at the 'holding company' level is typically unrewarding without more time and effort than is realistic within the imperatives mentioned above. I offer those links as a starting point for anyone who is inclined to advance the research phase of reporting.


However, a 2nd level search of the above link provides the following information:

Remington Arms Company, Inc. Initial Investment: February 2003 Remington, headquartered in Madison, N.C., designs, produces and sells sporting goods products for the hunting and shooting sports markets, as well as military, government and law enforcement markets. Founded in 1816 in upstate New York, the Company is one of the nation’s oldest continuously operating manufacturers. The Company had revenues in 2005 of approximately $410 million and distributes its products throughout the U.S. and in over 55 foreign countries. www.remington.com

Given that Cerebus acquired Remington for $370 million, and BRS paid $300 million for it four years, under the impression that it had 'revenues of approximately $410' , there is probably a very good reason why BRS was willing to take a ten percent hit on the transaction.

Maybe it wasn't really making $410 a year in revenues? Or maybe ...

We can only hope there is a better reason why Cerebus is willing to pay a third of a billiion dollars (the difference between the $410 milion 'revenues' and the 2007 sell price of $370) to acquire a company which BRS apparently found ... disenchanting.

Or maybe they considered the $70 million difference between the 2003 purchase price of $300 million and the 2007 sell price of $370 to be profit, assuming they had made no investments in the meantime.

I think I'm getting a Sick Headache.
You have the figures, you do the math.

(I'm wrapping my head in duct tape, lest it explode and make a mess on my computer screen.)

We can only hope it's not a raid, which would result in the demise of the Remington brand-name.