Sturm Ruger looking at Freedom Group but deal unlikely: CEO
Gunmaker Sturm Ruger & Co Inc said it was looking at the accounts of up-for-sale rival Freedom Group but said it was unlikely it would make a bid.
Sturm Ruger Chief Executive Michael Fifer said Freedom could be an acquisition opportunity and his company was looking at their books but he expects a deal to be grossly overpriced.
"I don't actually expect it to go a lot further than that," Fifer said at the company's annual meeting of stockholders on Tuesday. "We'll have to see what the pricing comes out."
Freedom Group, owned by private equity firm Cerberus Capital Management LP, had sales of $931.9 million in 2012.
Cerberus has come under pressure from the public as well as investors in its funds to sell Freedom Group after an AR-15 type Bushmaster rifle manufactured by the company was used in last year's Newtown school massacre.
Cerberus and representatives of Freedom Group could not be reached for comment immediately.
Cerberus, owned by private equity mogul Stephen Feinberg, bought firearms maker Bushmaster in 2006 and later merged it with other gun companies to create the Freedom Group.
"There are a lot of companies I would like to buy but they are not for sale. If there are any downturns and maybe the market overreacts, then something will become affordable. But as we stand here today, I don't see any meaningful acquisition opportunities," Fifer said at the meeting.
Shares of Sturm Ruger, which has a market cap of about $1 billion, closed up marginally at $51.27 on the New York Stock Exchange on Tuesday.
The company reported record quarterly sales on Monday, boosted in part by fears that impending legislation could ban the manufacture of certain high capacity guns.
Fifer said the company was searching for a manufacturing facility to develop new products and meet demand but would not spend on building one.
The company expects to spend about $30 million as capital expenditure in 2013.
(Reporting by Siddharth Cavale in Bangalore; Editing by Sriraj Kalluvila)