Sturm, Ruger & Company Inspecting Freedom Group, But Deal Unlikely

Sturm, Ruger & Company Inspecting Freedom Group, But Deal Unlikely

Sturm, Ruger & Company (NYSE:RGR) gun maker revealed that it is analyzing the accounts of rival Freedom Group, which has been up for sale for quite some time now.  However, Sturm, Ruger said that it might not bid for the company, reports Reuters.

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Sturm, Ruger & Company Inspecting Freedom Group, But Deal Unlikely

Sturm, Ruger & Company Inspecting Freedom Group For Acquisition

According to Sturm, Ruger & Company (NYSE:RGR) Chief Executive Michael Fifer, Freedom may be a good acquisition, and they are inspecting the accounts, but the deal may grossly overprice.

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“I don’t actually expect it to go a lot further than that,” said Fifer on Tuesday in a shareholder meeting. “We’ll have to see what the pricing comes out” he added.

For 2012, Freedom Group, which is owned by private equity firm Cerberus Capital Management LP, reported sales of $931.9 million. The private equity firm has been under constant pressure from public as well as investors to sell the Freedom Group after it was discovered that one of the guns, an AR-15 type Bushmaster rifle, used in last year’s Newtown school massacre was manufactured by the group.

Cerberus Capital Management, which is owned by Stephen Feinberg, acquired gun maker Bushmaster in 2006. Later, the equity firm merged other forearms firms under it to form the Freedom Group.

Fifer said in the meeting that there are many companies that they would want to buy, but not all are up for sale. As of now the company looks overpriced, but may become affordable if there are some downturns. “But as we stand here today, I don’t see any meaningful acquisition opportunities,” Fifer said.

On Tuesday, shares of Sturm, Ruger & Company (NYSE:RGR) were up marginally at $51.27 on the New York Stock Exchange. The gun maker reported record quarterly sales on Monday amid fears that authorities could ban the manufacturing of some high capacity guns.

The CEO said that, for 2013, the company plans to spend about $30 million as capital expenditure and is looking for a manufacturing facility to develop new products.

In December, Cerberus Capital appointed investment bank Lazard Ltd (NYSE:LAZ) will conduct an auction for Freedom Group. Apart from Sturm, Ruger & Company (NYSE:RGR), other companies reportedly looking to acquire Freedom include, Smith & Wesson Holding Corporation (NASDAQ:SWHC) and Alliant Techsystems Inc. (NYSE:ATK). Alliant is an aerospace and defense company that also manufactures ammunition and firearms accessories.

There have been no comments from both companies on the matter yet.

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