* Buys Bushnell for $985 mln
* Gains access to shooting, golf, skiing, camping markets
* ATK expects deal to close in next two quarters
* Transaction to add to ATK earnings from fiscal 2015
By Sagarika Jaisinghani
Sept 5 Alliant Techsystems Inc, the
world's largest ammunitions maker, will buy gun accessories
company Bushnell Group Holdings Inc for $985 million as it
shifts focus to a fast-growing shooting sports business from a
spending-constrained defense industry.
Alliant, spun off from Honeywell International in
1990 and commonly known as ATK, said it would integrate Bushnell
into its sporting group business, which makes products such as
sporting rifles, holsters and harnesses.
Bushnell, owned by private equity firm MidOcean Partners
since 2007, makes binoculars, riflescopes and night vision
equipment for sports such as shooting, hunting and fishing.
"We think ATK is uniquely poised to benefit from the ongoing
growth in US shooting sports and we think Bushnell continues to
shift the mix towards this higher multiple industry," RBC
Capital Markets analyst Robert Stallard wrote in a note titled
"ATK + Bushnell - hitting the target".
U.S. gun makers have reported strong results over the past
few quarters as consumers scramble to buy weapons on fears of
stricter gun-control laws following a shooting at a Connecticut
school last year.
President Barack Obama announced two changes to federal gun
rules last week to help keep weapons from criminals, and said he
still wants to push Congress to pass new gun control measures.
Private equity firms have also come under fire to review
investments in gun-related companies. Cerberus Capital
Management put its Freedom Group, whose Bushmaster rifle was
used in the Connecticut shooting, up for sale in December.
Sources, which told Reuters in August that ATK was nearing a
deal for Bushnell, said at the time that MidOcean's desire to
sell Bushnell was not influenced by those considerations.
"MidOcean targets investments in companies that, like
Bushnell, are leaders in their space where we see multiple
opportunities for growth," MidOcean Chief Executive Ted Virtue
said in a statement on Thursday.
SPORTING IN CROSSHAIRS
ATK's former Honeywell businesses supplied to the United
States and its allies for 50 years, including the first
electronic autopilot that enabled B-17 aircraft to accomplish
pinpoint bombing missions during World War II.
It also produces rocket motor and other propulsion systems
for human and cargo launch vehicles.
But ATK has been shifting its focus away from aerospace and
defense as the U.S. government reins in spending and is
investing in its sporting unit.
It bought Savage Sports Corp in June, adding centerfire and
rimfire rifles, shotguns and shooting range systems used for
hunting, competitive and recreational shooting to its portfolio.
The sporting business will account for about 45 percent of
ATK's revenue after the purchase of Bushnell, which is expected
to have sales of about $600 million in 2013.
Sporting accounted for about 26 percent of revenue in the
fiscal year ended March.
"Sporting is now ATK's largest segment and likely to remain
the focus for cash deployment, with strong backing from the
senior management team," RBC's Stallard said.
The deal will also help ATK to enter the golf, skiing and
ATK said it expects the deal to close in the next two
quarters and add to earnings from its next fiscal year ending
March 2015. The company intends to fund the transaction with
cash and debt.
ATK has secured a $900 million senior secured acquisition
financing commitment from Merrill Lynch, Pierce, Fenner & Smith
Inc and Bank of America. Citi was its financial adviser.
Cravath, Swaine & Moore LLP were legal advisers to ATK.
Morgan Stanley & Co LLC and Robert W Baird & Co Inc were
financial advisers to Bushnell, and Kirkland & Ellis LLP was its
ATK's shares have almost doubled in the past 12 months, far
outperforming the S&P 500 index. They were up 1 percent
at $98.08 in early trading on the New York Stock Exchange.