Smith & Wesson is on an acquisition jag. Last week they announced the purchase of knife maker Taylor Brands. This week, it’s an even more high profile addition. The Springfield, Massachusetts gun giant will be gobbling up Oregon-based Crimson Trace Corporation for $95 million. Being more related to their core firearms and outdoors business, the latest additions to the S&W portfolio look to be much better fits than their earlier foray into the perimeter security business. Here’s their press release:
Acquisition of Market Leader Provides Established Platform for Electro-Optics Business
Smith & Wesson Establishes Fourth Division
Closing Expected August 2016SPRINGFIELD, Mass., July 25, 2016 — Smith & Wesson Holding Corporation (NASDAQ Global Select: SWHC), a leading manufacturer of firearms and a provider of quality accessory products for the shooting, hunting, and rugged outdoor enthusiast, today announced that it has signed a definitive agreement to acquire Crimson Trace Corporation (Crimson Trace), the industry leader in laser sighting systems and tactical lighting for firearms, for $95.0 million, subject to certain adjustments, utilizing cash on hand.
Crimson Trace has long been a key supplier of laser sighting systems for Smith & Wesson. For more than two decades, Crimson Trace has provided consumers, military units, and law enforcement officers around the globe with the world’s largest selection of award-winning laser sight and tactical light products. Crimson Trace offers more than 225 products and is widely recognized as the world’s leading brand of laser sights for firearms. Its award-winning innovations include the Lasergrips®, Laserguard®, and Rail Master® platforms. The company’s product line also includes the Defender Series®, Lightguard®, and its new LiNQ™ wireless activation system. Based in Wilsonville, Oregon, Crimson Trace operates from a 50,000 square foot , leased facility where it engineers and manufactures its products.
Crimson Trace was founded 22 years ago and has organically generated a ten year compound annual revenue growth rate in excess of 10%. The company maintains a product development team that has an established track record of launching high-quality, innovative laser sighting products. As a result, its products maintain a premium position with hundreds of independent retailers as well as large sporting goods retailers, including Cabela’s, MidwayUSA, Nation’s Best Sports, and internet retailer Optics Planet, Inc.
James Debney, Smith & Wesson President and Chief Executive Officer, said, “Crimson Trace provides us with an exceptional opportunity to acquire a thriving company that is completely aligned with our strategy to become a leader in the market for shooting, hunting, and rugged outdoor enthusiasts. As the undisputed leader in the market for laser sighting products, Crimson Trace serves as an ideal platform for our new Electro-Optics Division. Firearms purchasers frequently buy electro-optic accessories to enhance the capabilities and performance of their firearms. The growth that Crimson Trace has delivered is a testament to the high product quality and the robust product development capability that Lane Tobiassen, President and Chief Executive Officer of Crimson Trace, and his team have established. That capability, combined with Crimson Trace’s leadership position in the market for laser sights, provides a solid framework for organic and inorganic growth.”
Lane Tobiassen, who joined Crimson Trace in 2005, will serve as President of the new Electro-Optics Division of Smith & Wesson, and will report directly to Debney. The Crimson Trace management team and workforce, as well as its base of operations, will remain in Wilsonville, Oregon after the acquisition.
Tobiassen said, “It is a great honor to lead Crimson Trace into this exciting new chapter in our history by joining the Smith & Wesson team. Since 1994, we have designed and brought to market more than 225 products, all of which reflect the passion, dedication, and spirit of innovation of our design engineers, production workforce, customer service representatives, and marketing and sales professionals. As the new Electro-Optics Division of Smith & Wesson, we believe that our capabilities, combined with inorganic opportunities to acquire related technologies, will expand the reach of our existing market footprint. This makes us a great fit for Smith & Wesson, a legendary company with an iconic brand, world-class products, and markets that include consumer, law enforcement, and international channels. We look forward to offering consumers exceptional performance from two of the industry’s most trusted names.”
Smith & Wesson will purchase all of the outstanding stock of Crimson Trace for $95.0 million, using existing cash balances. Crimson Trace is being acquired from Crimson Trace Holdings, LLC, which is owned by private equity firms Peninsula Capital Partners, LLC and VergePointe Capital, LLC; Lewis Danielson, the founder and Chairman of the Board of Crimson Trace; a small group of minority members; and certain members of management.
Jeffrey D. Buchanan, Executive Vice President and Chief Financial Officer of Smith & Wesson, stated, “As a result of our strong balance sheet, we intend to complete the purchase of Crimson Trace with cash on hand and we expect the transaction to close in three to six weeks. After the closing date, we expect the acquisition to be accretive to Smith & Wesson’s earnings per share in fiscal 2017. Due to its anticipated timing, the transaction is expected to have no impact on Smith & Wesson’s operational and financial results for the fiscal 2017 first quarter ending July 31, 2016. As of the date of signing, Crimson Trace’s trailing 12 month revenue was approximately $44.0 million, of which approximately 25% was revenue from Smith & Wesson and would be excluded from our consolidated revenue. The purchase price represents an estimated multiple of approximately 5.9x the trailing 12 month adjusted EBITDAS of Crimson Trace. We look forward to providing additional details following the close of the transaction.”
Cowen and Company, LLC is acting as exclusive financial advisor and Greenberg Traurig, LLP is acting as legal advisor to Smith & Wesson and its Board of Directors. Robert W. Baird & Co. is acting as exclusive financial advisor and K&L Gates LLP is acting as legal advisor to Crimson Trace and its owners.
About Smith & Wesson
Smith & Wesson Holding Corporation (NASDAQ Global Select: SWHC) is a leading manufacturer of firearms and a provider of quality accessory products for the shooting, hunting, and rugged outdoor enthusiast, delivering a broad portfolio of quality firearms and shooting, hunting, and outdoor accessories, to the global consumer and professional markets. The company’s firearms division brands include Smith & Wesson®, M&P®, and Thompson/Center Arms™. As a leading provider of shooting, hunting, and outdoor accessories, including reloading, gunsmithing, gun cleaning supplies, tree saws, and vault accessories, the company’s accessories division produces innovative, high-quality products under several brands, including Caldwell® Shooting Supplies, Wheeler® Engineering, Tipton® Gun Cleaning Supplies, Frankford Arsenal® Reloading Tools, Lockdown® Vault Accessories, Hooyman® Premium Tree Saws, BOG POD®, and Golden Rod® Moisture Control. The company’s manufacturing services division provides forging, machining, and precision plastic service for outside businesses. Smith & Wesson facilities are located in Massachusetts, Maine, Connecticut, and Missouri. For more information on Smith & Wesson, call (800) 331-0852 or log on to www.smith-wesson.com.
If this means CT lasers will be cheaper as a factory option from S&W, then good.
If it means prices for their lasers for every other brand of gun go up, then not good.
If neither happens, then I have no opinion.
^ yup. This. Plenty of nice companies that offer factory installed CT lasers on their products, I’d like to know how Smith intends to negotiate those contracts and will the new lasers have the S&W logo on them? Lots of conflicts of interest here.
I suspect that you’d pretty much see business as usual. There’s a lot more interconnection in the firearms business than most folks normally see on the surface. For example, Ruger’s foundry facility turned out tons of parts for other gun companies in the past – might still be doing so. And look how many AR companies assemble carbines based on other-branded Aero Precision receivers?
i would not have thunk that CT was valued quite so high, but good move by Smith to diversify within the industry.
I would say the price is high but I’d think the margins to be really good with what a set of CT grips costs.
Dan – headline misspell.
D A N I E L !!!
‘Git on it.
(Had to take my shot… LoL)
Hope this is good news. S&W has been solid for a while. Unlike Tiny Green.
CT has avoided taking the tactical space seriously. Maybe now we can feel the TC joy in black…and FDE.
Sounds like a well thought-out move to me. And if a quality laser is cheaper so much the better. If not-LOTS of alternatives…
Well there goes the quality of CT. Not to mention new models for new firearms that are not S&W. Not to mention the price going up. Get them while they are still good products and inexpensive.
Apparently you believe the laser market has room for more substandard, overpriced products? Or at least you believe S&W thinks so?
I think the S&W folks are smart enough not to squeeze the quality out of CT products, or capriciously jack up the prices, either of which would only alienate their loyal customers in a fairly competitive market.
I think there is plenty of profit margin in the CT products already, which is why the company was worth $95 million. If S&W is smart, they’ll just milk that cow while gaining some administrative efficiencies by bringing CT into the corporate fold.
We shall see.
I remember when CT first started. I got to work on their Glock models. As crude as they were at the time, I would have not bet they would have ever gotten off the ground.
This seems like a solid acquisition. We shall see. I think that Smith & Wesson is smart enough to know what it doesn’t know, unlike Remington’s owners who think they know everything and actually know nothing.
I like capitalism but when big companies eat smaller ones it does bother me.
I hope, I as a consumer am not the looser in this deal.
Sounds good to me. S&W is a solid company with solid products. I love my M&P AR.
But . . . Why do so many firearms and accessories manufacturers have their HQs in Liberal hellholes like Oregon and Massachusetts? Move folks and quit giving those gun-haters any of your tax money.
I can not jump on the high five band wagon for any company that produces firearms and accessories and decides to remain in Massachusetts. It’s in an area behind enemy lines and I am becoming more and more hesitant to invest my money on products that tends anti-second amendment states. Collective memories seem to forget when S&W rolled over on its back for Clinton 1 and peed all over itself and us. Back then I had a single S&W, today five. Just like Dick’s Sporting Goods and the Cheaper Than Dirts of the world, they need us more than we need them especially if they decide to play patty-cakes with Clinton 2. Crimson Trace really should rethink where they’re getting into bed.
I think SMITH AND WESSON deserve props FOR staying in MASS, each job they create gives a good image for gun companies in general if your family eats because of a check from Smith and Wesson and you live in a commie state like MASS well then at least the people around would have a good thing to say about a gun company if it’s providing the best income for your family VS If they pulled and left people jobless then the hate would compound even worse
WE CANT LEAVE ANY STATE, BUSINESS, PERSON behind in these strict gun grabbing states and just say it’s not happening to us so we don’t care, we all will be next to face harsher laws and regulations if we don’t stand FOR the people that have to deal with these harsh laws already!
” just put 11 rounds into your magazines at home and hear the freedom ring”
When I saw “BREAKING” (over-used) and Smith and Wesson, I hoped it would’ve been followed with “packs up and get’s out of Massachusetts.” Note to S&W: get to a free state and fuck Massachusetts as they will, undoubtedly, fuck S&W.
Buy Steiner Optics before goes out of business
Buy Steiner Optics before it is sold to the Chinese