ATK to Acquire Bushnell Group

Zacks

Aerospace and defense company Alliant Techsystems Inc. (ATK) decided to purchase Bushnell Group Holdings, Inc. (“Bushnell”) from MidOcean Partners for $985 million. This acquisition will enhance Alliant’s product offering in commercial and security ammunition, sporting arms and accessories market.

Bushnell is a provider of branded sports optics, outdoor accessories, performance eyewear and affordable sports products for the sports enthusiast. Post-acquisition Bushnell will be integrated into Alliant’s Sport Group and will bolster its core markets.

The acquisition of Bushnell will expand Alliant’s global reach and enhance its customer base. Bushnell has a proven record of product development and innovation, with more than 10,000 customer accounts in more than 90 countries worldwide. Alliant is expected to close the acquisition in the third or fourth quarter of fiscal 2014, subject to regulatory approvals and customary closing conditions.

Alliant has already secured external financing of $900 million to fund the acquisition. The total funding will be made through a combination of this new financing, borrowings under its existing revolving credit facility and cash on hand.

Alliant Techsystems makes strategic acquisitions with an objective to enhance its product coverage while increasing its market penetration. In Jun 2013, the company acquired Savage Sports Corporation, a unit of Caliber Company, for $315 million. In the last couple of years, Alliant completed several significant acquisitions, including Blackhawk Industries Products Group Unlimited LLC and Eagle Industries.

Alliant Techsystems expects transaction expenses and purchase accounting expenses for Bushnell to dilute its fiscal 2014 earnings. The acquisition, including transaction costs, is expected to turn accretive to earnings from fiscal 2015, and add $1.00 in fiscal 2016.

Alliant’s performance has been boosted by contribution from organic and inorganic sources. This has enabled the aerospace and defense company to surpass our expectation for the last ten quarters on the trot. The long-term expected earnings growth rate for this stock is 3.77%.

The markets also reacted positively to the decision. The shares of Alliant ended at $98.34 on Sep 5, gaining 1.16% in a day.

Alliant currently has a Zacks Rank #1 (Strong Buy). Other operators in the sector having a favorable Zacks Rank are Elbit Systems Ltd. (ESLT), Curtiss-Wright Corp. (CW) and HEICO Corp. (HEI). Elbit Systems currently has a Zacks Rank #1 (Strong Buy), while Curtiss-Wright and HEICO Corporation retain a Zacks Rank #2 (Buy).

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