ATK (formerly Alliant Techsystems), the ammo-making giant that Honeywell spun off some two dozen years ago, just acquired the holding company of Savage from a Minnesota venture capital firm. ATK is paying $315M cash, using cash it has on hand and an existing rolling credit facility; that’s about 5.5 times annual earnings, and ATK says it plans to be net positive on ATK earnings per share in the first year.
We should have seen this coming for several reasons:
- ATK, like seller Norwest Equity Partners, is originally a Minnesota firm, and its Sporting Group is still headquartered there (Anoka), even though it’s had to relocate corporate HQ to the shadow of the flagpole due to its dependency on government contracts;
- Everyone dependent on military contracts is looking to diversify, and Savage and its fellow brands (Savage Range Systems and Stevens) have almost zero military contract exposure;
- and perhaps most importantly, the current CEO of Savage is a former ATK VP. He only joined in January, when the CEO who led Savage from near-bankruptcy in 2008 to success today retired.
- This also explains what ATK was doing when they requested the packet on Freedom Group — we thought they were looking at Remington’s ammo-production costs, but now it seems more likely that they were pricing the Savage buy, and ratholing Freedom’s financials for future reference.
ARLINGTON, Va., May 13, 2013 /PRNewswire/ — ATK (NYSE: ATK) announced it has entered into an agreement to acquire Caliber Company, the parent company of Savage Sports Corporation. Savage is one of the world’s largest manufacturers of hunting rifles and shotguns, delivering innovative products for more than 100 years. The acquisition would expand ATK’s portfolio offering by adding long guns to its leading brands in commercial and security ammunition, shooting sports and security-related accessories. The transaction is subject to regulatory approvals and customary closing conditions. ATK anticipates closing the transaction in the first quarter of its Fiscal Year 2014 (FY14), which ends June 30, 2013.
via ATK to Acquire Caliber Company, Parent Company of Savage Sports Corporation – May 13, 2013. Read the whole press release.
Savage has had a history nearly as long and a rocky as Remington, with fewer legendary weapons, and fewer bankruptcies and receiverships, but it’s not completely without either. It has made everything from pocket pistols to shotguns, produced automatic weapons (including vast quantities of Lewis Guns) under license in the 20th Century, and even produced a .45 caliber competitor to the Colt that became the 1911, but its main product lines today are center- and rim-fire bolt action rifles.
Not a flipped negative — this .338 Lapua Model 110 BA Law Enforcement sniper rifle comes in Lefty, too.
The primary Savage rifles are the Model 10, 11 and 12 bolt-action center-fire rifles, and single-shot and repeating bolt-action rifles. There’s also a bolt-action shotgun, for Eastern deer and turkey hunters. A semi-auto rimfire, the Model 64, is still in production in various finishes, but the firm offers no semi-auto centerfire or Modern Sporting Rifle.
Savage guns are known for accuracy and value. An awful lot of police departments compared the Savage .338 magnum precision rifle to the much more expensive Steyr, and wound up buying the Savage and years’ worth of ammo.
Many models are also available in left hand actions, making them a good choice for that 10% for whom standard bolts are on the wrong side of the gun.
Scott Lipsett took this photo of the Model 11 Lightweight’s fluted bolt. The barrel’s free-floated in standard modern Savage practice.
The most recent Savage product introduction was a lightweight version of the Model 11, available in 9 popular calibers from .223 to .30-06, notably including two long-range specials, the 6.5 Creedmore and 6.5 x 284 Norma. The .223 version’s only 5.5 pounds before you scope it, so it’s a varmint buster that you can walk all day with, without building your biceps at all.
The well-remembered Model 99 lever-action rifle, with its Savage-specific chamberings .300 and .303 Savage, was for decades the Eastern whitetail hunter’s Winchester 94 alternative, but it is long out of production. (The last was made in 1998). However, it was this gun that led to Savage’s now-politically-incorrect Indian Head logo:
Chief Lame Deer. One good Savage deserves another! (We are so going to PC hell for that).
In 1919, Chief Lame Deer approached Arthur [Savage] to purchase lever-action rifles for the Indian reservation and the two men struck a deal. The tribe would get discounted rifles and Savage would get their support and endorsement. It was at this time in the company’s history, that Arthur Savage added the Indian head logo–a direct gift from the Chief–to the company name. By 1919, Savage Arms was manufacturing high power rifles, 22 caliber rifles, pistols and ammunition.
There are a few, very rare, Model 99 military muskets out there. Some early (Model 95) units were made for the New York National Guard , but the contract was cancelled, and the New York guardsmen went to the Spanish-American War to face Spain’s excellent Mausers with black-powder trapdoor Springfields instead. And others were made for the Montreal Home Guard, a citizen’s militia of Anglo men of substance of the WWI era. In addition to these rare rifles, Savage and Stevens shotguns were also used by the US military, notably in WWII as training shotguns for aerial gunners (as were similar Remington shotguns; all of these weapons used the Browning long-recoil system and resembled the Browning A5).
The Model 99 is the “other” lever action. It was much stronger than a Winchester 94, and was even chambered in .308 later in its run.
Stevens guns appear to be, essentially, downmarket Savages. The make is today nearly moribund.
One of the most interesting product lines acquired in the purchase is Savage Range Systems. You may have seen or used the “snail trap” or a “wet snail trap” range, you’ve used their product. (The indoor range we’re members of, in Manchester, NH, has such a trap, as does one of our favoriet “away” ranges, Silver Eagle Group in Virginia). They’ve made an environmentally safe and friendly trap that safely decelerates up to .50 BMG with no lead spatter, and makes recovering the lead child’s play. They even have completely diffetent technology retrofits for old ranges that don’t have room for a snail trap, using innovative rubber media. We can’t remember, but think AWG’s cool mobile range used a SRS trap. They also make a decent shoot house that’s miles above our tire houses from Blue Light/SOT days. (One thing about being retired is you totally envy the guys who are doing your old job today, as they have cooler toys. But sometimes they envy us, because in our day, we had more freedom when we were away from the flagpole. You can’t really micromanage an SFODA by daily 120-group Blind Transmission Burst, although we did have a few leaders who tried).
Savage Range Systems is the one element of the new buy that is, like most of ATK’s other business, highly exposed to government budgetary mismanagement. Indeed, ATK is suffering a little right now, due to the sequester and due to NASA’s budget cuts and reorientation away from space and towards domestic and foreign policy — ATK is a big producer of rocket stuff.
ATK is best known as the primary small-arms-ammunition producer to the DOD, but it is a remarkably wide-ranging conglomerate that does everything from put the mission suites in the (probably stillborn) MC-27 special operations aircraft, to put 1st-shot cold bore handspan precision in artillery rounds, to making a 5.56mm tracer round that sort of works. In addition to, and largely as a spinoff of, its military-ammunition dominance, the company already had a portfolio of sport-shooting and personal-defense firms. It was, however, lacking a firearms manufacturer. ATK’s Sporting Group now has remarkable vertical integration in the sporting arms market, as its brands include:
- Ammo: Blazer, CCI, Estate Cartridge, Federal Premium, Fusion, Speer..
- Guns: Savage, Stevens.
- Other: Alliant Power, Blackhawk!, Champion (targets), Gunslick, Outers, RCBS, Savage Range Systems, Weaver.
So now they can put the gun in your hand; the scope and rings on, and bullets, in the gun; the case to carry it to the range to sight it in; the range itself; the targets to observe and adjust your group; and the sling to carry it on the big hunt. Then, they’ll sell you the rig to reload the casings you’ve expended so far. They’ll make money selling you the razor and the blades.
And the Savage Group, part of ATK’s purchase, also includes BowTech Archery, so you can do it all over again during next bow season.
The workers in Westfield are anxious, but Massachusetts’s anti-gun politicians, unlike their peers just west in Albany, or just downriver in Connecticut, have directed their vilification more at the legal users than the makers of sporting arms, so there’s less reason to bail than for NY or CT based firms. Also, ATK has a history of leaving alone those profitable subsidiaries with established, skilled workforces. Savage Range Systems will benefit from ATK’s reach in Washington and contract savvy, but the big winner is ATK, which has been jonesing for a long-gun maker for quite some time. And perhaps that lobbying and contract savvy will mean Remington finally gets some competition the US sniper rifle contracts it’s had a lock on for over 50 years. .
We wish Savage and ATK all the best with this new venture.
Here are some links for you.
Savage Arms website. They also have a Facebook site linked from that page.
Savage Range Systems web. You can also get there from snailtraps.com.
ATK web should give you some idea of the company’s reach and depth. ATK facebook. They like to hire veterans, by the way.
The Springfield, MA, Daily Republican on the sale of what’s a local business (Westfield is a few miles west — where else? — from the decaying, crime-saturated milltown of Springfield). This article has quite good recent (last 20 years) history of Savage, probably dredged from the paper’s morgue.
An article with the Minnesota business angle.
The Wall Street Journal’s Amy Or writes a post on the sale, strongly implying (without actually saying) that the motive for the sale was Norwest’s desire to divest evil, icky guns. That appears to be fantasy or fabrication on Or’s part, as she cites no evidence for her implication. (More likely, Norwest did what VC firms do, turned a very good profit in about one year of investment). Or is a byline you probably want to watch for — a dishonest, fabricating reporter. (But isn’t that threedundant?) Of course, what do we know, we’re just MBA investors who know the industry a bit, not innumerate credentialed-but-uneducated J-school grads.