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Norwest Equity Partners Selling Gunmaker Savage to Alliant

The Exchange

Private equity firm Norwest Equity Partners is selling its stake in rifle and shotgun maker Savage Sports to Alliant Techsystems (ATK), roughly 16 months after joining with the company's management to take control of the company.

Under the deal, Alliant will pay $315 million in cash to acquire Caliber Co., the parent company of Savage, whose brands are Savage Arms, Stevens and Savage Range Systems. With the purchase, Alliant is adding long guns to its wares. The Arlington, Va., company operates in aerospace and defense, but it also has a division that produces ammunition, such as Federal Premium, and accessories like Weaver scopes.

Alliant believes the Savage purchase will add to its earnings for fiscal year 2014 that's currently underway. The acquisition is expected to close in the fiscal first quarter, which ends June 30. Savage, based in Westfield, Mass., began business in 1894. Minneapolis-based Norwest, which is part of Wells Fargo (WFC), has had Savage as a portfolio company since January 2012.

The financials of gun-company ownership have played a part in the national gun-control debate several times since the school shooting last December in Newtown, Conn. Shortly after the attack, large investment firm Cerberus Capital Management said it would look to sell Freedom Group, the maker of Bushmaster rifles, which it oversees. General Electric (GE) recently made headlines when GE Capital set plans to pull out of financing for gun-shop purchases.

Legislators have been involved, too. Some states have passed measures to make it harder for individuals to get firearms, but a gun-control proposal failed to pass the U.S. Senate last month. Gun sales have been robust in recent months as American buyers bid to get ahead of possible changes in the law.

While certain gun companies are or likely will be changing hands, investors appear to view the business at large as still a safe place to make money. Shares of Sturm Ruger (RGR) are up 9.8% this year, while Smith & Wesson's (SWHC) stock has tacked on 3.8%. Olin (OLN), a chemicals company that also makes ammunition, has gained 9.9%. Alliant's stock has risen almost 15% in 2013.

For Alliant, sales totaled $4.36 billion in its most recent fiscal year. The sporting group, of which Savage will become a part, had sales of $1.2 billion.