S&W To Become Free-Standing Company

American Outdoor Brands Corporation announced today that it planned to separate into two publicly traded companies. One company would be focused on firearms (Smith & Wesson) while the other company would be dedicated to outdoor products (American Outdoor Brands). The split would be finalized in the second half of 2020 according to the press release.

Bloomberg reports that the split is part of “an effort that may help it boost values that have flagged under pressure for gun reforms in the U.S.” “Gun reforms” is the euphemism that Bloomberg is using for gun control.

While something like this would have been in the works for months, I find it interesting that the announcement is being made the day after the Supreme Court denied cert to Remington. Bloomberg does make reference to this in their article as well as moves by retailers such as Dick’s and Walmart to limit what firearms and ammunition they sell.

The official rationale for the split is to let each segment concentrate on their separate markets.

The purpose of the spin-off is to enable the management team of each company to focus on its specific strategies, including (1) structuring its business to take advantage of growth opportunities in its specific markets; (2) tailoring its business operation and financial model to its specific long-term strategies; and, (3) aligning its external financial resources, such as stock, access to markets, credit, and insurance factors, with its particular type of business.

AOBC Chair Barry Monheit said, ” There have been significant changes in the political climate as well as the economic, investing, and insurance markets since we embarked upon what we believe have been our very successful diversification efforts.” It is obvious to me that Monheit is speaking about both national and state efforts to impose more restrictions on firearms ownership and possession.

The move by American Outdoor Brands is similar to that of Vista Outdoor. In that case, Vista Outdoor was the firearms-centric portion of the ATK split. While initially the stronger part of the split company, the pull back in firearm and ammunition sales hit it hard. They finally sold off the Savage Arms portion of the business this summer to concentrate on ammunition and the other outdoor portions of their business.

James Debney, the current CEO, will become the CEO of American Outdoor Brands. Mark Smith will become CEO of Smith & Wesson. He is currently the president of the Manufacturing Services Division of AOBC.

The entire press release can be found here. It goes into much more detail on the lower leadership positions, finances, etc.


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