Tech Company Offers $1.082 Billion for Remington Outdoor Group
Billion-dollar buyout of Big Green? Will a tech company with digital security/smart-gun technology take over Remington Outdoor Company? This is either the biggest business story of the year in the gun industry, or much ado about nothing — simply a publicity stunt by Global Digital Solutions, Inc. (GDSI).
Here’s the background. On March 11, 2014, GDSI announced that it was offering to acquire Remington Outdoor Company (previously known as Freedom Group), for $1.082 billion in cash plus shares of GDSI common stock. In connection with this offer, GDSI filed a Form 8-K with the SEC regarding three proposed transactions, including an unsolicited letter of intent to acquire Remington Outdoor Company, Inc. (Remington). The Form 8-K can viewed on the GDSE website.
Despite the Form 8-K filing, some observers believe that the GDSI buy-out offer is nothing more than a publicity stunt. According to the Shooting Wire, “Executives with Remington Outdoor Company (Remington) have described yesterday’s … announcement of plans by Global Digital Solutions to acquire Remington as ‘attention seeking in its worst form’.” That doesn’t sound like Remington is giving much credence to the $1.082 billion buy-out offer.
Is this for real? Will a company that has developed RFID tags and “smart-gun” technology acquire Remington, and related brands Bushmaster, DPMS, Marlin, H&R, AAC, Dakota Arms, Para USA and Barnes Bullets? What’s in it for GDSI? For one thing, Remington is generating a lot of cash right now. Remington Outdoor Company has estimated that its net sales for 2013 will be in the range of $1.250 billion to $1.275 billion and that its adjusted EBITDA will be in the range of $235 million to $240 million.
Richard Sullivan, CEO of GDSI, declared there are “powerful synergies” between Remington’s core businesses and the technologies GDSI has developed such as RFID tags and GPS tracking units. As reported on the CNN Money website, Sullivan said that “cyber-based technologies, coupled with enhanced digital product development” will be increasingly important to the military armament industry. That industry, Sullivan added, is “evolving rapidly toward a RFID/WiFi-enabled technology platform.” Remington is ripe for a high-tech overhaul, Sullivan believes: “In this dynamic environment, we see enormous opportunity to consolidate this market with a program of targeted acquisitions, including the proposed Freedom [Remington] transaction. Technological convergence is the future in the cyber/smart arms arena and we’re eager to leverage our proven history of success by helping Freedom and others navigate the transition from analog to digital.”
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