Smith & Wesson Sold in Fire Sale

Smith & Wesson Sold in Fire Sale

SPRINGFIELD – A former Smith & Wesson president negotiated the purchase of the once proud gun manufacturer on Monday.

The purchase of the company by Saf-T-Hammer Corp. of Scottsdale, Arizona from Tomkins Corp. of Great Britain was a bail out after devastating losses.

“Tomkins’ motivation to sell Smith & Wesson as part of its refocused worldwide operation presented an extraordinary opportunity for Saf-T-Hammer,” said company chairman Mitchell Saltz in a news release.

Saf-T-Hammer makes a number of gunlocks and is not a gun manufacturer. Robert Scott, president of Saf-T-Hammer was once president of Smith & Wesson.

Tomkins purchased the historic manufacturer of revolvers for $112 million in 1987 and sold the company for just $5 million now and $10 million in a year.

Saf-T-Hammer stock took an immediate beating on news of the purchase, losing about a third of its value in a single day. Tomkins stock increased slightly on the news of the sale Monday.

Smith & Wesson’s troubles began as the company tried to find ways to fight off a growing number of lawsuits brought by cities and municipalities across the country. Last March the gun maker agreed to a deal with the federal government that angered gun rights activists.

Smith & Wesson agreed to help implement government plans to monitor and track the sale of guns, as well as place locks on guns. Second Amendment defenders were offended by the move and began a boycott that nearly bankrupted the company, resulting in major financial losses and company lay offs.

No other gun manufacturer has dared to purchase Smith & Wesson, according to Larry Pratt, executive director of Gun Owners of America. Pratt said before the sale that he expected Smith & Wesson would go under and other gun manufacturers would only be interested in purchasing manufacturing equipment, but not the company itself.

Saf-T-Hammer announced plans to continue to sell Smith & Wesson firearms, as well as trigger locks, gun cable locks, and gun safes.

“Smith & Wesson, a brand name for 147 years, would be at the top of any list of immediately identifiable corporate logos recognized world-wide,” said Scott in a release.

“We are proud to return this storied company to American ownership,” he said, adding, “we plan to increase the company's revenue through expanded branding activities and strategic acquisitions that will compliment the company's current product lines.”

Smith & Wesson has just received a $1.7 million federal grant with and additional $1 million promised next year for the development of smart gun technology. The sale of the company gives Saf-T-Hammer Corp. access to technology that gun control advocates want the government for mandate for all firearms. If that happens Saf-T-Hammer Corp. will have the technology needed by all other gun manufacturers.

In a written statement, Tomkins said that Smith & Wesson profits went from $13 million in April 2000 to a loss of $4 million by April 2001. Saf-T-Hammer has agreed to inherit only a portion of Smith & Wesson’s debts.

Tomkins will write off $23.8 million of debt and Saf-T-Hammer will pay off $50 million in debts over ten years. The sale will result in losses of about $100 million for Tomkins.