The consolidation of the USA outdoor retail sector continues. The Great American Outdoors Group, which owns Cabela’s and Bass Pro, plans to purchase Sportsman’s Warehouse for $785,000,000 in cash. This means three of the biggest outdoor gear and shooting supplies vendors will all have the same parent company*. Great American (based in Missouri) will pay $18 a share for Sportsman’s Warehouse, a 42% premium over the stock price on 12/21/2020, and will remain private. The acquisition deal is expected to close in the second half of 2021. Sportsman’s Warehouse is currently based in West Jordan, Utah.

CLICK HERE for Sportsman’s Warehouse Buy-Out Press Release »

“The driving force behind the partnership is the two companies’ similar histories and highly complementary business philosophies and geographic footprints”, the companies said in a statement. “Both entities share a passion with their customers for fishing, camping, hunting, boating and other outdoor activities.”

American Outdoors said the acquisition will allow improved online ordering and faster product delivery, “by leveraging the combined company’s extensive network of distribution centers and stores[.]”

Will Gun Inventories Grow or Shrink? That Is Uncertain…
Will Sportman’s Warehouse continue to be a very good source for firearms and hunting gear, with attractive gun prices? That remains to be seen. The press release made no mention whatsoever of gun sales, though it did state that Cabela’s-brand hunting gear will be available. The company boasted about expanded product lines for fishing and boating:

Sportsman’s Warehouse customers can expect… widely expanded product offerings including:

Access to the world’s largest selection of premium fishing tackle including legendary Bass Pro Shops and other premier brands.

The largest selection of premium hunting gear including the iconic Cabela’s brand.

Sportsman’s Warehouse will be able to offer customers the world’s leading boat brands, side-by-sides and ATVs at money-saving prices.

Transaction Overview
The merger agreement was unanimously approved by the Sportsman’s Warehouse Board of Directors. The transaction, which is expected to close in the second half of 2021, will be completed through a cash merger and is subject to approval by Sportsman’s Warehouse’s shareholders, as well as regulatory approvals and other customary closing conditions. The transaction is not subject to any financing condition. The entities will continue to operate independently until the transaction closes.

* Along with Bass Pro and Cabelas, The American Outdoors Group owns the White River Marine Group (boats/trailers) and a selection of outdoors resorts in the USA.

There are tough times ahead for Remington. Fox News reports that: “Privately-held Remington Outdoor is now at risk of declaring bankruptcy after a collapse in sales and profits. Saddled with debt, the historic gun manufacturer is short on avenues for escape.” (LINK). Fox News adds:

“The rifle and shotgun manufacturer’s third-quarter sales plunged 41% as demand for firearms dried up. That led Remington to report adjusted earnings before interest, taxes, depreciation, and amortization that were 78% lower year over year. Over the first nine months of 2017, the company has produced a $60.5 million net loss, compared to a $19.1 million gain in the prior-year period.

And with its credit rating in the trash bin, the future is bleak for ‘America’s oldest gunmaker’. Today, debt on the company’s books has ballooned to almost $1 billion[.]”

Read Full Remington Report on FoxBusiness.com »

Financial analysts report that Remington’s earnings decline will further harm the company’s already poor corporate credit rating. That means Remington must pay even higher interest rates to borrow money, further bleeding cash and decreasing profitability. This, in turn, accelerates the momentum towards filing bankruptcy. Fox explains: “With the firearms and ammunition manufacturer burning through cash as a result of falling sales, S&P expects it will undertake a restructuring within the next year.”

Other large American gun industry companies have seen their stock value drop dramatically this year. Vista Outdoor (Savage, RCBS, CCI etc.) is down 62% since December 9, 2016, while American Outdoor Brands (Smith & Wesson) has dropped 36%.

Remington Has a Storied History
Founded in 1816, Remington is the oldest continuously-operating gun manufacturer in the United States, and remains one of the USA’s oldest commercial enterprises. Even with its present difficulties, Remington still sells more sporting rifles and shotguns than any other American company. Remington has developed more cartridges than any other U.S. company. And it is the only American company that sells firearms AND ammunition under its own name.

The Remington enterprise was founded in 1816 by Eliphalet Remington in Ilion, New York, as E. Remington and Sons. In 2016 Remington celebrated 200 years of history. American Rifleman TV explored the history of Remington Arms Company in a TV special which focuses on many of the company’s most noted firearms. Here is a preview:

It’s official, Cabela’s is being acquired by Bass Pro Shops. The Shooting Wire reports:

Cabela’s Shareholders Approve Bass Pro Shops Merger
“It only took about 35 people around 20 minutes yesterday to approve a $4.2 billion merger that’s been lingering for months. Backed by what Cabela’s CEO Tommy Milner calls ‘overwhelming support’, the shareholders of Cabela’s approved [the] proposed merger with Bass Pro Shops. Under the current terms, shareholders will receive $61.50/per share for the stock which has been trading in the $58.90-$59.94 range. After the merger, the companies will be based in Springfield, Missouri. No word on how many of the 1,000 workers in Cabela’s Sydney, Nebraska, headquarters will be retained.”

Bass Pro Shops will acquire popular outdoor retail chain Cabela’s (NYSE:CAB) in a $4.2 billion deal expected to close in Q3 of 2017. According to The Street: “Cabela’s agreed in April to be bought by Bass Pro Shops for $61.50 a share, down from the original purchase price of $65.50 a share, valuing the acquisition at $4.2 billion.” After the merger, Bass Pro will continue to recognize Cabela’s CLUB points, and the branded credit cards will be serviced by Capital One.

History of Two Major Outdoor Retailers

CABELA’S
Founded in 1961 by Dick, Mary and Jim Cabela, Cabela’s is a highly respected marketer of hunting, fishing, camping, shooting sports and related outdoor merchandise. Today, Cabela’s has over 19,000 “outfitters” operating 85 specialty retail stores, primarily in the western U.S. and Canada. Cabela’s stores, catalog business and e-commerce operations will blend seamlessly with Bass Pro Shops and White River Marine Group. Over the past 55 years Cabela’s has built a passionate and loyal base of millions of enthusiasts who shop both at its retail stores and online.

BASS PRO SHOPS
Bass Pro Shops, founded in 1972 by avid young angler Johnny Morris, is a leading national retailer of outdoor gear and apparel, with 99 stores and Tracker Marine Centers located primarily in the eastern part of the U.S. and Canada. Morris started the business with eight square feet of space in the back of his father’s liquor store in Springfield, Mo., the company’s sole location for the first 13 years of business. Johnny’s passion for the outdoors and his feel for the products and shopping experiences desired by outdoor enthusiasts helped transform the industry. Bass Pro Shops, which employs approximately 20,000 team members, has been named by Forbes as one of “America’s Best Employers.”

On Sunday, June 14, 2015, firearms manufacturer Colt Defense LLC and its subsidiaries (“Colt”) filed for Chapter 11 bankruptcy, with the goal of selling the enterprise. Colt had been strained by a heavy $355 million debt burden, and had previously warned that it might resort to bankruptcy if it could not reach an agreement with bond-holders. In a Sunday news release, Keith Maib, Colt’s chief restructuring officer stated: “The plan we are announcing and have filed today will allow Colt to restructure its balance sheet while meeting all of its obligations to customers, vendors, suppliers and employees and providing for maximum continuity in the company’s current and future business operations.” Read full Press Release.

According to Marketwatch, Colt hopes to have new owners by the end of the summer: “Colt is racing to get to the auction block by August 3, with an opening buyout offer from Sciens Capital Management LLC, Colt’s private-equity backer.” There are actually ten separate but related business entities under the Colt umbrella that collectively filed for backruptcy. These are listed in the Bankruptcy Filing Summary, In re Colt Holding Company LLC, Case Number: 15-11296.

Colt is one of America’s oldest arms-makers. After securing revolver patents in 1836, Samuel Colt founded the Patent Arms Manufacturing Company. In 1855 this business became Colt’s Patent Fire Arms Manufacturing Company. As an enterprise, Colt enjoyed success throughout most of its long history. However, the company has struggled in recent decades, having been through Chapter 11 bankruptcy once before, a process which ended in 1994. In 2002, Colt split into two separate companies, but these were re-united in 2013 with the acquisition of Colt Manufacturing Co. by Colt Defense LLC.

Colt will not shutter its doors immediately, having secured $20 million in operating financing from lenders. But there are still fundamental problems with the business. The Wall Street Journal states: “But Colt has struggled in recent years with supply-chain and working capital issues, a slowdown in rifle sales and its 2013 loss of a key contract to supply the U.S. Army with the M4.”

Colt’s immediate problems have been cash flow, specifically making payments on its big loans. Last year Colt had to borrow $70 million from Morgan Stanley to pay bond interest. Colt has roughly $100 million in secured debt plus $260 million in bond debt. That’s a heavy burden.

Colt Defense vs. Colt’s Manufacturing Company
In 2002, Colt Defense was split off from Colt’s Manufacturing Company though both entities remained in the same West Hartford, CT location. Colt’s Manufacturing Company serves the civilian market, while Colt Defense serves the law enforcement, military, and private security markets worldwide. The two companies were reunited in 2013 when Colt Defense acquired Colt’s Manufacturing Company. Currently, Colt’s Manufacturing Co. is a subsidiary of Colt Defense.

Why has Ruger stock risen so far, so fast? Just look at the numbers. Ruger is selling all the guns the company can build. The latest sales figures are remarkable. Ruger just announced that 2013 sales were up 40 percent over 2012. Earnings increased 55 percent for 2013 compared to 2012.

The company said new product introductions were a significant component of sales growth, representing 29 percent of firearm sales in 2013. New product introductions during the year included the LC380 pistol, SR45 pistol, Ruger American Rimfire rifle (below), SR-762 rifle, and Red Label II shotgun. Ruger also noted that in the fourth quarter it began to manufacture a limited quantity of rifles at its recently acquired 220,000 square foot facility in Mayodan, North Carolina. Firearm production at the Mayodan facility is expected to increase during 2014.