Clarus Corporation’s subsidiary, Sierra Bullets, LLC, will acquire certain assets relating to the Barnes Bullets brand of specialty hunting bullets in a Chapter 11 bankruptcy auction conducted by Remington Outdoor Company, Inc. and certain of its subsidiaries.
Founded in 1932 and headquartered in Mona, UT, Barnes manufactures lead-free bullets and ammunition sold through national retail and e-commerce channels.
Sierra is expected to acquire Barnes for $30.5 million in cash, pursuant to an asset purchase agreement. For the trailing twelve months ended June 30, 2020, Barnes Bullets reported $21.8 million in sales. The acquisition is anticipated to be immediately accretive to Clarus’ earnings.
“Barnes embodies the ‘innovate and accelerate’ playbook we seek with ‘super-fan’ brands,” said John Walbrecht, Clarus’ president. Barnes is a leader in lead-free, all copper bullets, with a rich history of product innovation and strong brand awareness amongst the core enthusiast, yet it has untapped go-to-market potential. We believe these ingredients give us a heightened advantage to develop world-class products, increase brand awareness, expand product categories and improve distribution while staying true to the core user.”
The acquisition of Barnes presents multiple strategic and financial benefits to the company’s bullet and ammunition platform, most notably the addition of a comprehensive lead-free, all copper offering.
Clarus’ Executive Chairman, Warren Kanders, commented: “The Barnes acquisition caps off our strategy to build a leader in specialty premium bullets and ammunition. We now have a platform of scale that we expect to continue to deliver strong recurring revenue with high gross margins and free cash flow conversion. This acquisition also demonstrates our ability to patiently wait for strategic assets at attractive values that we expect to drive growth and maximize our returns on invested capital. We look forward to further acquisition efforts being in similarly accretive, strategic areas outside of the bullet and ammunition market.”
Clarus’ CFO, Aaron Kuehne, added: “The opportunistic and strategic acquisition of Barnes represents an accretive, tuck-in asset that brings our bullet and ammunition business additional capacity in a period of great demand and improves our overall scale within our Sierra segment. In addition, the acquisition presents significant financial and operational synergies that we expect to maximize with our strong balance sheet. As such, we expect our leading specialty bullet and ammunition platform has long-term runway to becoming a segment with $100 million in sales-generating 25-to-30 percent adjusted EBITDA margins.”
The transaction is subject to the approval of the U.S. Bankruptcy Court for the Northern District of Alabama at a hearing currently scheduled for September 29, 2020, and other customary closing conditions. Once approved, the negotiated asset purchase agreement will be entered into and the transaction is expected to close in October.
More financial details on Barnes Bullets will be disclosed in Clarus’ upcoming third-quarter earnings call, which is anticipated to be in early November.
Clarus’ brands include Black Diamond, Sierra, PIEPS, and SKINourishment.
Photo courtesy Barnes Bullets