A Closer Look At Two Big Moves In The Firearms Industry

(AP Photo/Richard Lardner, File)

Two very big moves in the firearms industry happened last week, though one of them went largely unreported in the media. There was a fair amount of attention when the iconic firearm company Colt was purchased by Czech gun manufacturer CZG, but the announcement from Ammo, Inc. that it intends to acquire the popular online firearm auction site GunBroker.com is also notable news in the firearms industry.

CZG acquired the iconic gun brand in a deal worth an estimated $320-million in cash and stock, and the move will elevate the Czech gun company both in the United States and in terms of global sales. Reaction from the gun community has been largely positive, in no small part because of CZG’s reputation for quality firearms. As Dan Zimmerman of The Truth About Guns opined:

For those who are fans of the rampant pony, this should be seen as a positive move. While having an iconic American brand owned by a foreign firm may be jarring to some, CZ has a well-deserved reputation for producing excellent products and delivering good customer service.

Colt hasn’t been a healthy company for at least a decade. After losing its military contracts, it filed for bankruptcy protection in 2017. And while the return of quality versions of some of their much-loved snake guns to their product line has been a plus, the Colt lineup hasn’t been one that has wowed retail gun buyers in a very long time.

The CZ acquisition now ensures that the brand will continue under better, more innovative leadership that’s well-financed and seems determined to restore the Colt name to its former place of prominence in the minds of America’s gun buyers.

The CZG/Colt acquisition is expected to be finished in the second quarter of 2021, which is also around the same time that Ammo, Inc. is expected to complete its purchase of GunBroker. Ammo, Inc. chairman and CEO Fred Wagenhals says the move will diversify the ammunition manufacturer’s revenue base while vertically integrating the online auction site into its existing portfolio of brands.

Mr. Wagenhals noted that “we founded AMMO to be a disruptive technology-based company that could serve the shooting community with cutting-edge ammunition offerings, whether that be for the military, law enforcement, hunting or recreational shooting communities. GunBroker.com is a perfect fit and supports AMMO’s mission across many levels.

Steve Urvan had the foresight and entrepreneurial drive to start GunBrokers.com more than 20 years ago with the same spirit and vision. With his drive and intimate understanding of how to serve our collective market, Steve created the world’s largest online marketplace for the purchase and sale of firearms, ammunition, and accessories.”

Mr. Wagenhals explained that “the combination made sense to our management team and Board as it expands our ability to best ensure the retail market continues to be served at the highest level while affording AMMO with an opportunity to enhance its sales channels, operating margins and drive increased shareholder value.”

The deal to acquire GunBroker involves an estimated purchase price of $240-million, paid for with a combination of cash and stock in Ammo, Inc.

It’s worth noting that both of these acquisitions are by existing companies within the firearms industry, and not outside hedge funds or investors that have no connection to the Second Amendment community. That’s a big positive, because neither CZG or Ammo, Inc. are likely to try flip the companies they’ve acquired (after first gutting them in order to reduce their own expenses). Both companies are making these moves to allow them to expand their own position in the marketplace, and I’m optimistic that the moves will ultimately benefit their customer base as well as the companies’ bottom line.

 

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Aug 03, 2021 4:30 PM ET