Buy Low, Sell High: Freedom Group May Be Bought Out By… Taurus?

Freedom Group Logo

Bloomberg.com reports here that the Freedom Group firearms companies, which were put up for sale last month by Cerberus, have a suitor with cash in hand. Taurus! It turns out that the Brazilian company is the second largest firearms manufacturer in the world in terms of revenue, below Smith and Wesson and above Sturm Ruger.

Taurus Logo

 

American investors on Wall Street are running away from publicly traded gun companies at the moment. The estimated net value of all the major gun companies, including the Freedom Group, has plummeted in the last month. Enter Taurus, flush with cash after a tremendously successful period of growth in the past two years. Fiercely pro-gun rights and looking to expand ever further into the U.S. civilian market, they see Freedom Group as temporarily undervalued, and they want it. It’s classic capitalism– buy low, sell high. Buy something currently out of favor but which has a good track record of lasting value, and bet that you will profit like crazy later on when things turn around.

According to the Bloomberg article, the Freedom Group is expected to bring somewhere between $745 million and $1.13 billion in a potential sale. This is a big bite for anyone to chew– for example, Taurus accounted for about $300 million in net revenue last year, so presumably they would have to borrow a few bucks to seal a deal. But don’t underestimate the Brazilians, they are absolutely serious and they just might have the financial savvy to pull it off.

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  • http://www.facebook.com/people/Paul-Epstein/667480221 Paul Epstein

    This would be hilarious for all those folks whose first bit of advice to any new gun owner is ‘don’t buy a Taurus’.

    • Fyrewerx

      I used to be one of those folks, especially after the initial problems I had with my PT709 Slim (which all got worked out eventually). Then, I bought an S&W M&P Shield, and compared side-by-side to the PT709, had overall poorer quality. Turned out that the PT709 was much better value.

      • spencer60

        Agreed, Taurus has been working towards the same niche Ruger dominates, the value priced, decent quality firearm.

        Companies like Smith & Wesson or Springfield depend on overseas manufacturers to design and build the firearms that are their biggest sellers.

        Taurus is completely the opposite, with an integrated supply chain that starts at raw materials and ends with finished product.

        They have complete control over their supply chain, whereas a problem in Croatia would shut down Springfields’ entire XDx product line.

        • Cameron

          I’m not calling you wrong, just genuinely curious. I know the XD line is the HS2000 line from HS Produkt, but which of Smith’s guns are manufactured overseas?

          • Raven

            I don’t know about S&W, but I think Springfield manufacture a lot of their 1911s in Brazil as well.

          • http://www.thefirearmblog.com/ Phil W “Senior Writer TFB”

            The lightweight 1911 frames are made by Imbel.

          • Woodroez

            As floppyscience said, I’m pretty sure the M&P .22 pistol is a partnership with the same people who make the P22 for Walther, Umarex. The rest of the S&W is made in the USA. Raven is also correct that Springfield’s 1911s are Brazilian made.

          • http://www.thefirearmblog.com/ Phil W “Senior Writer TFB”

            S&W and Walther have cut all ties. Walther is now a sole entity based in Fort Smith, Ar.

        • floppyscience

          “Companies like Smith & Wesson … depend on overseas
          manufacturers to design and build the firearms that are their biggest
          sellers.”

          The vast majority of S&W’s products are designed and built in the US. In fact, the only non-US made S&W I can think of is the new M&P22 pistol.

        • http://www.thefirearmblog.com/ Phil W “Senior Writer TFB”

          Taurus has also gained the marketing, sales and distribution rights for Diamondback Arms.

  • DougE

    I’m surprised Taurus brings in more revenue than FNH.

    • flyingburgers

      They don’t. I think the article is mistaken. Groupe Herstal brought in revenues of $612 M in 2009.

      • glenn

        Maybe they are only looking at civilian small arms sales.

    • terminalbrd

      FNH isn’t a publicly traded company. They were comparing revenues of publicly held corporations, not all firearms manufacturers.

  • Nick

    I think this is good news if the deal goes through as it is better for a pro gun company to take ownership over freedom group than some holdings firm that dumps them at the first sign of crisis. I hope the Q/C returns back to Marlin.

    • Sable

      BRING BACK THE CAMP CARBINE!

      • Keith K.

        And let it work with Glock magazines.

        • sharpie.david

          I agree with all of the above.

  • Bob Z Moose

    Some people are gonna be upset by this, but this is probably the best thing to happen to the US gun market. Taurus stands behind their products with the whole lifetime warranty, but have also been innovating and responding to consumer trends better than some of the Freedom Group companies. Hope they shake things up and improve quality.

  • Tyson Chandler

    I also think this is a good thing. Taurus has made a lot of improvement in their product and their image. The Freedom group needs to be in the hands of a pro-gun company. Shame on Cerberus for running away and dropping them like a hot potato. Some of the polls that are shown by the media show something like a 65% approval rating for an assault weapons ban. I don’t know the sample size of these surveys, but I bet it is no where near the 2.5 MILLION people who purchased firearms in December alone. Anyone with an objective eye can see that the demand for firearms and the desire for Second Amendment rights is only growing. Obviously, the management at Taurus has that type of vision.

  • Ghostalker

    Lending new meaning to those ‘meanwhile, at Taurus’ memes where the Taurus is some cobbled together POS look alike to some famous design lol

    • spencer60

      You do realize that Taurus revolvers look like Smith and Wesson’s because at one point they were both owned by the same company, and they had full rights to each others designs.

      Same for their semi-autos that look like Beretta 92s, because they used to build those for Beretta for the S. American market and purchased the rights to the design.

  • spencer60

    This would be great news. As mentioned, Taurus is an innovative and very pro-Second Amendment company (they give a free NRA membership with every firearm).

    The brands in the Freedom Group like Remington and Marlin are easily worth the cost, while the ‘black rifle’ business of Bushmaster and DPMS is flat-out on fire.

    It would also be good to see Nardelli stopped before he can ruin these companies anymore. Marlin has become the poster child for poor quality in recent years, after his cost cutting and consolidation there.

    Same for Bushmaster, once they moved that away from it’s old location and failed to keep the workers who made the brand a success in the first place.

    Taurus has struggled with QC for 20 years, but they are improving each year, and now they are generally no better or worse than any other firearms company.

    Maybe this kind of dedication will bring back the struggling Marlin brand, and keep Remington going strong.

    This also will hopefully mean that they will be moving their manufacturing out of firearms-unfriendly NY, and somewhere like AZ that is more amenable to their business (and offers tax breaks to firearms companies who move).

    • JumpIf NotZero

      I laughed so hard when I saw Nardelli was getting hands on at freedom. I swear they only release him on something to intentionally screw it up. I’m not sure why they want to do it, but I’m fairly certain that’s what he is there for. Home Depot, Chrysler, Freedom, he’s just GOT to be doing it intentionally. No one could be THAT incompetent right!?

      • Tim Pearce

        Well, that’s a long-established business practice. If you can’t beat your competition by producing a better product, buy your competition and trash their quality.

  • Rufus Cornpone

    Check out Ruger stock for the last 3 months, it has recovered and surpased it’s pre-Newton price decline…S&W is the only other publicly traded gun company.
    http://investing.money.msn.com/investments/stock-price?symbol=US:RGR

  • jack

    This is very interesting. First the Brazilians take over an American Beer Icon, now this. Very interesting.

    • rob in katy

      They are doing pretty well for a socialist tax grabbing country!

  • Cameron

    This might be one of the worst bits of of firearm industry news I’ve heard in a while. Between my dad, brother, and myself, we owned 3 Tauri over a 3 year span. All different models, two semis and one revolver. All three were without a doubt the worst three guns we’ve ever owned. They literally self-destructed or locked up with common bulk ammo like WWB and Fed. Champion. I’d rather trust my life to a quality fixed blade than a Taurus after those experiences.

    Of course, it’s not like the quality reputation of any of the Freedom Group companies has improved – markedly, the opposite – so I guess we’ll see how much further down we can go.

    • Cameron

      I’ll get downvotes for my comment based on the popularity of Taurus in the other comments, which is fine. I will say that, on a political level, it’s great. I do not like their products, but they’re a firmly pro-2A company, which is a great thing compared to the current holders of the Freedom Group.

      • Fred Johnson

        Taurus is a firmly pro-2A company only due to firearms sales in the US. Brazil doesn’t have anything like our 2nd amendment, do they?

    • Bill

      Now my personal experience with several Taurus handguns is the exact opposite. A college friend owned a PT-92 purchased in the late 1980′s. We shot the heck out of that gun for years. Nary a problem beyond a worn finish. Fast forward to today. Two other friends own a Millennium Pro and 709 Slim. Both are shot regularly and have never malfunctioned in any way. The MP is arguably the most accurate pocket pistol I’ve ever shot. I’m less well acquainted with another friend’s .44 Special snubbie. (Sorry, don’t recall the model.) I’ve only shot it once but found it superior in every way to my three Charter Arms Bulldogs.

    • Tim Pearce

      I’ve also had the opposite experience with Taurus. I have had eight of their products, over the years, and one had a moderate issue that Taurus fixed for free, including shipping.
      Also, it depends on where you got the WWB. Walmart WWB is not the same ammunition as WWB from other places, due to Walmart’s buying practices. Walmart WWB is a touch higher quality than Wolf steel case.

  • PT 1911 fan

    I have (4) Taurus handguns and have never had a problem, my PT 1911 is the best shooting 45auto that I have ever owned.

    • Sable

      I second this, mine was the most reliable pistol I’ve ever owned but I just couldn’t get over that damnable firing pin safety adding all that take up to the trigger. The “extra” safety measures in their firearms are the only thing I complain about with Taurus (I know it’s a feature for some of you so I can’t knock it entirely).

    • Tim Pearce

      I’ve had eight. One had a moderate problem. It was sent to Taurus and fixed in a surprisingly fast time. One has had a problem of diminishing frequency that could have just been a burr. Two of the Tauruses I have sold, I regret selling.
      One of my Tauruses, a PT145, is *far* more reliable than the Springfield Loaded 1911 I used to own.

  • http://www.facebook.com/profile.php?id=100000480676794 Phil Wong

    “Taco Bell was the only restaurant that survived the Franchise Wars. So, now ALL restaurants are Taco Bell…”

  • http://www.facebook.com/renatohenrique.marcaldeoliveira Renato Henrique Marçal de Oliv

    As a Brazilian, I think Taurus is just looking a little further into the future than US companies. This is not the first storm the gun industry faced in the 21st century. Another advantage Taurus has is that it is also the largest wep industry in Brazil, being the major supplier for Mil and LE. Getting money won’t be a problem. It is more a question of willingness.

    • GUNDOOD

      Civilians allowed own guns in Brazil yet? If not then I think your opinion is worthless and without merit. kthxbye

      • Yoni

        There is no need to be so rude. Although, it isn’t as easy as it is here in the US to legally own firearms in Brazil; civilians can in fact buy them. In fact, if I recall correctly, the government tried to outright ban guns a few years ago and Taurus helped to prevent the ban.

        • http://www.thefirearmblog.com/ Phil W “Senior Writer TFB”

          They can own firearms in Brazil. Restrictions on types and calibers are in place however.

      • http://www.thefirearmblog.com/ Phil W “Senior Writer TFB”

        Taurus is expanding. I wrote earlier they have also obtained the sales, marketing and distribution rights from Diamondback Arms,

  • Kyle

    This is how a country is deconstructed. It is sold to outside forces piece by piece.

  • kevin

    I would rather the company be split up and distributed, I don’t care what you all say about them being pro 2nd, they are a foreign company and don’t have as much stake in the game, not to mention everyone on this blog shits on freedom group’s QC, but you all are slobbing over a company with widely renowned and long time QC issues and garbage products.

    • Tim Pearce

      QC issues that have been steadily diminishing. “Garbage” products that more often than not work flawlessly for every bit as long as a S&W or Beretta.
      Also note that while Taurus has been getting better, other brands have been getting worse.
      I’d be willing to bet Taurus’ stake in the game is greater than you imagine. I doubt they get many military or police contracts, due to their 20 year old reputation that nobody wants to re-evaluate. I’d lay money on the US civilian market being at least 70% of their income.
      If guns were banned, full stop, in the US, it would be as devastating to Taurus as a new era of Prohibition would be to Budweiser. Sure, there are other countries they can sell their beer to, but those other countries have a very dim view of their products.

  • Cymond

    Taurus has a tendency to constantly introduce new models and discontinue old ones.

  • Fred Johnson

    Well crap. I own a couple Taurus guns, but am I wrong for not wanting a foreign company to own a bunch of American companies? Taurus already got Heritage and Diamondback, I guess Taurus wants it all.

  • tacticaltshirts.com

    Good news! I would rather these companies be owned by someone who actually has an interest in the firearms business. On paper, it’s a gamble. In my heart, I don’t believe it’s a gamble. I think it’s a VERY screwed move. Very. They pull this off and Taurus get’s massive respect. –TTR

  • Jaekelopterus

    HATE internal handgun locks but I love Taurus. They’ve bought into the California Handgun Registry like no one else, giving Californians like me an alternative to pricy Smiths and other, cheaper revolvers of suspect quality (I’m looking at you, creepy zinc .22 SA with a crossbar safety!) Freedom Group was designed by vulture capitalists to fail, and to render American jobs into CEO profits. Taurus creates desireable assembly jobs in the US, Freedom Group destroys them. This is good news.

  • Brazilian Customer

    Being brazilian I think I can talk a little about Taurus: they are NOT pro gun!!!!
    Just check his atitudes in Brazil where we have the most rigid gun laws in the world (and it is getting even worst on legislative…).
    Their focus is to maintain his MONOPOLY of guns in Brazil asking absurd prices for the government polices and military (a Taurus pistol here runs for about U$1.500,oo average!) and the quality of the products they sell HERE is the WORST possible (as they are NOT THE SAME gun quality they sell in US).

    It being this way that Taurus get their big revenue… selling on a monopoly market (backed by federal laws that dictates this monopoly) to ALL police and military forces in Brazil with absurd high prices and simply DONT CARE for the brazilian civil market.

    They did NOT standed up when we were fighting at the legislative agains anti gun laws! As it does not do it now too.
    If I lived in US I would NEVER, EVER buy a Taurus product.
    Americans, beware of Taurus Company police… you dont really know how they works!

    • Anonymoose

      Sounds a lot like the Freedom Group under Cerberus.

  • Franky

    and im sure we are going to see an overall drop in quality control.

    • Tim Pearce

      Not necessarily. A.) Taurus *has* been getting better over the years. B.) Not everyone is idiotic enough to mess with what works in a company they just bought. It’s entirely possible nothing will change with those Freedom Group brands, and it’s also possible things will get better. It all depends on what’s going on in the heads of the people who make the decisions. C.) It could be the opposite. Taurus could suddenly get a lot better due to using what works in the Freedom Group companies and applying it to Taurus.

  • Laserbait

    Wow, that’s going to be a whole lotta guns I can cross off my list if this goes through. And thanks for the heads up on Diamondback being owned by them now – I can cross that one off too. After talking with several people that have worked with them, I want to have absolutely nothing to do with that company.

  • http://www.facebook.com/alexandrunicolin Alex Nicolin

    That’s what I call a bull market!

  • Seth

    I am unenthused at the prospect of a foreign company owning these manufacturers. At the same time, I am hopeful that Marlin leverguns of reliable quality might again be found on shelves, especially the 1894.

  • Benny

    I have a 38 Revolver Made from Taurus and it`s great.