TC sold to S&W

[eskimo36]

Announced this morning...

http://ir.smith-wesson.com/phoenix.zhtml?c=90977&p=irol-newsArticle&ID=942841&highlight=

[SourMash]

Smith & Wesson Acquires Thompson/Center Arms, Inc.

New Hampshire based company purchased for $102 million cash

By Press Release


Springfield, Massachusetts, December 18, 2006 -- Smith & Wesson Holding Corporation (Nasdaq: SWHC), parent company of Smith & Wesson Corp., the legendary 154-year old company in the global business of safety, security, protection and sport, today announced that it has entered into a definitive agreement to acquire Thompson/Center Arms, Inc., a 40-year old, privately held, New Hampshire-based designer, manufacturer and marketer of premium hunting firearms, for $102 million in cash. The transaction is expected to close in the beginning of January 2007.



Thompson/Center Arms, headquartered in Rochester, New Hampshire, manufactures and distributes innovative firearms recognized by hunting enthusiasts for their precision, performance, craftsmanship, and reliability. Thompson/Center Arms occupies a leadership position within each of its core product categories of black powder firearms (or "muzzleloaders"), black powder accessories, and interchangeable firearm systems, as well as a presence in precision rimfire rifles. The transaction will combine two leading firearms companies with complementary products, to yield a single provider of high- quality pistol, revolver, shotgun and rifle products.



Michael F. Golden, President and CEO of Smith & Wesson Holding Corporation, said, "The acquisition of Thompson/Center Arms is an important step in our diversification strategy. Thompson/Center Arms has consistently delivered both profits and strong gross margins while building its position in the hunting rifle market. This move will expand our presence in the $1.1 billion long gun market by providing immediate entry into the hunting rifle and black powder segments, which represents approximately $600 million in domestic sales. In addition to carving out a leadership role in black powder and single shot hunting rifles, Thompson/Center Arms has developed tremendous expertise in manufacturing long-gun barrels, a competency that will be important to Smith & Wesson as we expand our capabilities even further into the long gun market."

The purchase price for Thompson/Center Arms includes the company's Rochester, New Hampshire facility, which produces all of the company's products and is situated geographically between Smith & Wesson's manufacturing operations in Springfield, Massachusetts and Houlton, Maine. The transaction will be financed with the proceeds from the sale of convertible senior notes and an acquisition line of credit.



In conjunction with the acquisition, Gregg Ritz, President and CEO of Thompson/Center Arms, will be named President of Smith & Wesson - Hunting. He will continue to lead the Thompson/Center Arms operation and will head Smith & Wesson's efforts to develop its hunting business. Ritz said, "In addition to bringing together two well-established and highly respected brands in the firearms industry, this acquisition increases opportunities for both Smith & Wesson and Thompson/Center Arms. Smith & Wesson's ability to provide capital for growth and expertise in lean manufacturing processes will provide critical support for our new product pipeline and our need for increased capacity based on strong customer demand. In turn, Thompson/Center Arms' array of barrel manufacturing expertise, hunting rifle products, and accessories fits nicely into the Smith & Wesson portfolio of pistols, revolvers, shotguns and future hunting rifles. There is absolutely no overlap in our product lines, while there is tremendous similarity in our dealer and distribution channels and our marketing vehicles."

http://www.shootingtimes.com/swtc_121806/

[clodbuster]

I sure do hate to see this happen to the industry and to companies like TC but understand it's survival thing.   Get bigger or perish.  Tha same thing happened to the company I used to work for and it cost me a great job.  Good luck to the working people who have made both companies great.  Not to worry about the exec's they always manage to stomp on enough bodies to step up out of the muck,  and a Merry Christmas to them.

[Redhawk1]

I like both S&W and T/C. I have had nothing but good experiences with both. So I don't think it is a bad thing.

[Pixsurguy]

I like both S&W and T/C. I have had nothing but good experiences with both. So I don't think it is a bad thing.

It may or may not be a bad thing for us, actual or potential users/buyers of TC guns.  Unfortunately, I can pretty much guarantee that it will be a disaster for the working people of TC.   I have no knowledge as to whether TC was a good place to work before.  However, my experience as an attorney involved in many acquisitions is that the workers are almost always screwed.   The "small" company that had employed them probably was more flexible in the job rules and customs than the giant that has swallowed their former employer.  I'd say that if the bean counters were not in charge before, they sure as hell will be now.  The employees are always the first to suffer when the buyer begins the inevitable cost reductions.   The middle level administrative people will lose their jobs, since S&W certainly already has such people doing human relations, accounting, payroll, etc.   I'm glad that I don't work at TC and my sympathies go out to them.

[Keith L]

Most of the time you are right.  I had a large company as a client for years that took the position that they bought companies because they were successful, so they didn't mess with them.  I hope S&W is that way, but I have no way of knowing.  I guess time will tell.

[Redhawk1]

I like both S&W and T/C. I have had nothing but good experiences with both. So I don't think it is a bad thing.

It may or may not be a bad thing for us, actual or potential users/buyers of TC guns.  Unfortunately, I can pretty much guarantee that it will be a disaster for the working people of TC.   I have no knowledge as to whether TC was a good place to work before.  However, my experience as an attorney involved in many acquisitions is that the workers are almost always screwed.   The "small" company that had employed them probably was more flexible in the job rules and customs than the giant that has swallowed their former employer.  I'd say that if the bean counters were not in charge before, they sure as hell will be now.  The employees are always the first to suffer when the buyer begins the inevitable cost reductions.   The middle level administrative people will lose their jobs, since S&W certainly already has such people doing human relations, accounting, payroll, etc.   I'm glad that I don't work at TC and my sympathies go out to them.

Again more speculation.

[Chris]

Just like so many other acquisitions, it's all about making synergies work, properly managing/financing the blue-sky...and thinking BIG.

...Chris   

[Keith L]

If I remember right TC had a good sized investment casting operation that did contract work as well as make gun parts.  One of my clients years ago did casting for some of the S&W automatics.  That was aluminum die casting, and different from the steel investment casting, but it makes me wonder if S&W may have  been looking for some casting capacity as well as the long gun market segment the press release was discussing.  Speculation, but a good thought.

[MnMike]

I have not had good experiences with S&W handguns. I love TC. I will hope for the best.

mike

[Davemuzz]

It may or may not be a bad thing for us, actual or potential users/buyers of TC guns.  Unfortunately, I can pretty much guarantee that it will be a disaster for the working people of TC.   I have no knowledge as to whether TC was a good place to work before.  However, my experience as an attorney involved in many acquisitions is that the workers are almost always screwed.   The "small" company that had employed them probably was more flexible in the job rules and customs than the giant that has swallowed their former employer.  I'd say that if the bean counters were not in charge before, they sure as hell will be now.  The employees are always the first to suffer when the buyer begins the inevitable cost reductions.   The middle level administrative people will lose their jobs, since S&W certainly already has such people doing human relations, accounting, payroll, etc.   I'm glad that I don't work at TC and my sympathies go out to them.

Well,

I dunno if you noticed, but this is America and our economic system is called capitalism. And in a capitalistic system, stuff like this happens. Job losses in certian disciplines will happen, however job securiity in others will be even more secure. And those who lost their jobs will find other jobs. This will not be an easy or inexpensive proposition, but these things happen.

At least the company wasn't acquired by a foreign investor that doesn't understand the American society. (AKA how S&W got the locks to begin with).

Dave

[clodbuster]

Dave    That would be a very generous and open-minded attitiude if downsizing had ever happened to you,  especially if, as the name of the messageboard says  you had any gray in your beard.  You will not find a job making anything near what you were earning if you're past 50 when it happens to you.  Twenty years of loyal service don't mean crap.  First hand experience!!!!!!!

[louiethelump]

I have made several trips to S&W and talked with quite a few of their employees.  They are not a bad company to work for and are not the kind of company to step on employees without consideration.  I hope and wish both companies the best and I think highly of both of them.  It could be great for us comsumers.

Louie

[Bullseye]

I do not understand the big deal over the locks.  I have two S&W's with them.  It is the owners choice whether or not they use them, I personally do not.  They are not that noticable unless the owners wishes to dwell on the fact that it is there.

But then again I do not understand the big deal about a crossbolt safety on a lever gun either, but it seems to upset many others.

If you have bought a gun of about any kind lately they come with some kind of lock.  Wnchester lever guns have a cable (or did until they closed), Marlins have a big piece of metal that goes across the receiver with the bolt open and Remington puts a key on the safety of their shotguns.  It is the future of guns, like it or not.

[Davemuzz]

Dave    That would be a very generous and open-minded attitiude if downsizing had ever happened to you,  especially if, as the name of the messageboard says  you had any gray in your beard.  You will not find a job making anything near what you were earning if you're past 50 when it happens to you.  Twenty years of loyal service don't mean crap.  First hand experience!!!!!!!

Well Clods'o...It's awfully nice of you to point out specifically what would or would not happen to me in a given situation. Especially since you don't know the first damn thing about me. You don't know my age, education, work history or occupation.

However, that was not my point. My point WAS, bad things DO happen. BUT, good things also happen. You generally don't hear about the good things that happen because those people don't post the "hey I'm set until I retire since this merger took place" stuff on the internet. You however, point out the other side of the equation.

Dave.

[Graybeard]

Enough of the personal attack BS. DON'T be the next to try it.

[Pixsurguy]

"Again more speculation. "

No, it is not mere speculation, since predicting future events based upon past experience seems to be what most of us do.  it's what Wall Street does.  It's what S&W has done.

I can only go on my own personal past experience in the fallout from acquistions and that experience tells me that more likely than not, many people will lose their jobs in a New England that is not overrun with good manufacturing jobs.   

I seem to spend a lot of time realizing that my predictions about whatever were wrong and perhaps this will be yet another of them.    I sure hope so.

[colorado kid]

wasn't it several years ago the smith and wesson was going to close because of some political pressure. What a turn around. I just hope that if something gos wrong with smith and wesson that the whole company won't shut down.I have a thompson contender and it is a great gun, I hope that quality of the fire arms produced won't suffer.

[Davemuzz]

Smith sales for their year end in 2002 was $80 million and their loss per share that year was ($.52). For their year ended in 2006 (they have a fiscal year end of April) their sales were $190 million and their profit per share was $.28.

So, Colorado Kid is right....it was\is quite a turn around. I believe I read that the majority of increased sales from 2005 to 2006 have come from sales to individuals as opposed to "corporate" or government sales. I think that bode's well for the company and says alot about the individual acceptance of the products that Smith makes.

With their acquisiton of T\C they have jumped in with both feet into the sportsmens longgun hunting market. It woiuld appear that Smith has a growth oriented business plan and if they are good at it, will do well and succeed. It would appear they have a good start based upon the last 4 years.

So, with some hard work and agressive marketing, quality products and customer satisfaction, hopefully this American company will continue to keep their market share and put the "kabash" to foreign competitors.

Dave.

[buffalohunter]

WHATEVER!!!!!!!!!!!!!!!!!!!!!!!

[HHI-7420]

It seems to me that most or all of what I read was about RIFLES. What was said about the encore or G2 PISTOLS?  Pat

[Davemuzz]

It seems to me that most or all of what I read was about RIFLES. What was said about the encore or G2 PISTOLS?  Pat

Pat,

I don't quite understand what you are asking here. G2's are frame's that you can attach a rifle barrel to or a pistol barrel to. You can't attach a rifle barrel to a Smith 44 revolver. (Unless your a really good welder)

Dave.

[Keith L]

I understood the question here because it is a pistol forum.

[Davemuzz]

  Oh......Your right....what was I thinking? (way too much egg nog)

Dave

(But....if I cut 20" off of my T\C 44 mag barrel, and weld it to my Smith 44 mag, do I now have a Smith long gun, or do I have a T\C revolver?...And, where would I send it to get serviced?)......pour me another egg nog please!

[Zen900]

I like both S&W and T/C. I have had nothing but good experiences with both. So I don't think it is a bad thing.

Twice in my life I've been with companies with good reputations that were bought out. Generally speaking it is not good to be bought out. If you had an established and well respected reputation it is not likely that the new owners can equal that hard won reputation. Employee morale tends to drop a few years after the acquisition when workers realize that the new management is in it for themselves and whatever they can plunder. Morale affects the quality of work. Acquisitions are mostly about money.
     If a company had a poor reputation then a buyout may be the answer to that problem. So did Thompson have a good or bad reputation? You decide. There's your answer to whether or not the TC purchase is good or bad.

[Davemuzz]

Hmmmmm.....Tell me what company out there that isn't in the business of making money?  I have been associated with many companies that offered top quailty service and\or products.....and that is why they made money.

There isn't a quality company out there that's in the business of providing top quality service while breaking even or losing money on the cash flow side. Ask Austin & Halleck how well that worked out.

Dave.

[Zen900]

Hmmmmm.....Tell me what company out there that isn't in the business of making money?  I have been associated with many companies that offered top quailty service and\or products.....and that is why they made money.
Dave.

 I think we are on different pages. Obviously it is your way or no way.

[Flash]

I can't wait to see the new K frame Contender and Sigma Encore. I see nothing good coming from this buy-out other than S&W sucking the life and profits out of T/C and then selling it a few years down the road. The employees are the most expensive commodity and when the work force is cut by 40%, T/C  instantly looks more marketable. The stragety of becoming a more diversified supplier is most likely smoke and mirrors. I wouldn't be surprised if some product lines of T/C are dropped and /or sold off within a year or so. Yea, not a good day for T/C fans.

[Davemuzz]

I see nothing good coming from this buy-out other than S&W sucking the life and profits out of T/C and then selling it a few years down the road. The employees are the most expensive commodity and when the work force is cut by 40%, T/C  instantly looks more marketable.

  ;DWow.....40% cut in the employee base. That's a significant cut. Do you think they can keep up current levels of production with those kind of labor cuts? I'm not even talking about quality....just production levels.

And since they are tryiing to "smoke and mirror" this thing to value ramp it to resell, the increased sales from less manfacturing product because of less labor, and poor quality should certanly help with the value issue. And how is that they are going to increase sales with less product?

I'm waiting for your answer.........just waiting.


Dave.

[Keith L]

I can't wait to see the new K frame Contender and Sigma Encore. I see nothing good coming from this buy-out other than S&W sucking the life and profits out of T/C and then selling it a few years down the road. The employees are the most expensive commodity and when the work force is cut by 40%, T/C  instantly looks more marketable. The stragety of becoming a more diversified supplier is most likely smoke and mirrors. I wouldn't be surprised if some product lines of T/C are dropped and /or sold off within a year or so. Yea, not a good day for T/C fans.

The tactic you propose is what was known as putting lipstick on the pig.  The idea was to buy a company, internally raid it, then sell what was left with a few enhancements to make it look like a good deal.  Common in the 90s, but since the fall of Enron we don't see people trying it as often.  Buyers are frequently venture capitol companies that look over everything carefully.  It takes more than lipstick to make the pig attractive any more, so thankfully this type of sale is not to common any more.