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Sturm, Ruger & Co. Inc. Message Board

  • equity_360 equity_360 Apr 1, 2013 12:24 PM Flag

    can someone answer this question

    Where is the better fit for freedom group assets? Ruger has a strong line with gap in repeating rifles. After blowing all excess cash on the December shareholder distribution, will Ruger pursue freedom?

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    • With only one unlikely exception, there is no benefit to Ruger shareholders of a Freedom acquisition. There are no efficiencies to be had and Ruger could, if it wanted to, easily design a gun to compete with any gun Freedom makes. The only possible benefit would come if Freedom had state of the art production facilities and was purchased for its asset value only at a discount.

    • It is strange that you consider a dividend to shareholders as "blowing" cash. Are you a part of a management team of a public company? Using cash to make acquisitions instead of dividends infrequently benefits shareholders but it ALWAYS benefits management. They pay themselves more because they then run a bigger organization (even if less profitable).

    • You need to read Fifer's statement on the spec. Divvy. He didn't even come close to "blowing all excess cash" on it. He stated that there was money left for strategic acquisitions and production improvements. That doesn't mean he would be interested in Freedom Group however, if it were even feasible.

      • 1 Reply to captainwho2
      • Ok. I agree. They will have more cash this quarter (not kidding). But fifer must have said doh! When just days after announcing divvy freedom went on the block. The only good fit I see is Remington for the autoloaders and shotguns. That would be a good fit for the or swhc. Taurus can have marlin. And bushmaster might be too much of a headache for all but very private equity.

    • Freedom Group is for sale for $1 billion. Ruger has only $31 million in cash, and doesn't use debt. I don't see how Ruger could possibly afford to purchaser Freedom Group. In fact, I don't think anybody will buy them, because they are probably going to be punished by tort lawyers and government officials for making Bushmasters, just as soon as Cerberus and its teacher pension fund investors extricate themselves from this investment. For example, CALSTRS, California teachers pension fund, is invested in Cerebrus which owns Freedom. I thiink the Freedom Group auction will fail.

      puzzled48

    • Possibly a good fit.

      Remington has the premium bolt-action rifle, the 700. Ruger's "American" bolt-action rifle is targeting a slightly lower price point.

      Bushmaster might not be worth the trouble, they are a bargain bin brand for AR15s, and the lib media has a strong negative bias against the Bushmaster brand. Most of Ruger's key products currently are not applicable to proposed AWBs. (SR556 not a huge seller, Mini14 tactical also small seller).

      Sentiment: Strong Buy

 
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