Vista Outdoor Inc. has agreed to purchase the ammunition and accessory assets resulting from the bankruptcy process of Remington Outdoor Company Inc.
Anoka-based Vista, owner of Federal Ammunition, is buying the assets for $81.4 million. The Remington unit generates approximately $200 million in annual sales.
The purchase includes Remington’s munitions manufacturing facility in Lonoke, Ark. It does not include Remington’s firearms business.
“Remington ammunition and accessories have a historic role in America’s sporting heritage, with a legacy dating back to 1816,” Chris Metz, general manager of Vista Outdoor, said in a press release.
Vista will pay cash for the unit and expects the deal to be accretive to fiscal 2022 earnings.
The Northern District of Alabama bankruptcy court must approve the deal. There is a hearing on Tuesday. The agreement is also subject to other customary closing conditions.
Vista reports its financial results in two segments: shooting sports, which includes ammunition and accessories, and outdoor products. In the first quarter, sales in the shooting sports segment increased 8.2%, fueled in part by increased participation in outdoor activities and an increase in the number of new firearm owners.
Almost ago 5 million new gun owners in the United States this year, with significant participation from people of color and women, according to the National Shooting Sports Foundation (NSSF), the firearms industry trade association. Some purchases were made for self-defense, the NSSF said, but a large percentage came from people interested in hunting or sport shooting. The NSSF said retailers were reporting a 139% increase in ammunition sales over the same period in 2019.
The growing interest in firearms can also be seen in the increased Minnesota background checks compared to last year. According to NSSF’s Mark Oliva, the state recorded 34,829 background checks in August, down from 21,899 the same month a year ago.
During Vista’s first quarter conference call, Metz said that during the spring 2020 hunting season, hunting license and tag sales increased by approximately 35%.
“Across the country, national fish and game agencies have seen a significant increase in hunting and fishing activity,” Metz said. “The lack of live sports, social distancing and court-to-table trends are additional drivers, driving people back into the woods.”
According to the Minnesota Department of Natural Resources, the number of spring turkey permits for youth and adults this year is up 145% from spring 2019. The department will report on the total number of deer permits sold this year in November.
The company said in the statement that it has sufficient cash and cash available for the winning bid over Remington’s assets. Vista has focused on reducing its long-term debt over the past few years. In the first quarter, the company said improved cash flow enabled it to increase debt repayment.
Rommel Dionisio, an analyst at Aegis Capital Corp., wrote in a research note to investors that the deal is a good strategic fit for Vista.
“Such an acquisition should help create even greater critical mass for Vista Outdoor’s already market-leading ammunition segment,” Dionisio wrote.
Shares of Vista closed Monday at $19.20 per share, up 1.4%. Year-to-date, shares are up more than 150%.