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Vista Outdoor Wins Bankruptcy Auction for Remington's Ammunition Business

By Rich Duprey – Sep 29, 2020 at 1:37PM

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It will bring the historic Remington name into the portfolio alongside the market-leading Federal brand.

Vista Outdoor (VSTO 0.59%) has emerged as the winner of an auction for the ammunition assets of bankrupt firearms manufacturer Remington Outdoor, it announced yesterday.

The ammunition and outdoor gear company will pay $81.4 million for Remington's manufacturing facility in Arkansas, its accessories business, and the intellectual property of the ammo business, including the Remington brand and trademarks.

Dollar sign on pile of ammunition casings

Image source: Getty Images.

On target for growth

It made a lot of sense for Vista to bid on Remington. As the owner of the Federal brand of ammunition, the largest brand on the market, Vista Outdoor stood to benefit from the current crush of demand ammunition as gun sales surge to unprecedented levels.

Remington had accepted a stalking horse bid from private equity firm JJE Capital, which set a floor of $65 million for subsequent bids made. In recent days it was reported gunmaker Sturm, Ruger was also bidding on the business.

Yet Vista or rival Olin, which manufactures the Winchester brand of ammunition, made a better fit after Remington was sent into bankruptcy for the second time. Remington's private equity owners had saddled it with debt, which, combined with lawsuits stemming from the Sandy Hook Elementary School shooting in 2012, made it unable to continue as a viable business.

Vista CEO Chris Metz commented on the auction win, saying: "We see a clear path to value creation. With our deep expertise and resources, we can transform Remington's ammunition and accessories businesses to create a more efficient, profitable and sustainable operation."

Remington recorded net ammunition and accessories sales of $200 million in 2019, and Vista expects the acquisition to be accretive to earnings in fiscal year 2022. It expects the transaction to be completed in the third quarter of fiscal year 2021, which would be around the end of the current calendar year.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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