Breaking News: ATK Splits into Defense & Sporting Gear

ATK

ATK has announced that the company is splitting into two companies, a defense company, which will be called ATK Orbital and a sporting company that does not yet have a name. ATK Orbital will take control of the Lake City Army Ammunition Plant and will sell ammunition to the new sporting company. Shares in the new sporting company will be distributed to existing ATK shareholders.

ATK’s sporting brands include Savage Arms, Federal Premium, Bushnell, BLACKHAWK!, Primos, Final Approach, Uncle Mike’s, Hoppe’s, RCBS, Alliant Powder, CCI, Speer, Champion Targets, Gold Tip Arrows, Weaver Optics, Outers, Bollé, Cebe, and Serengeti.

The sporting-relevant portion of the press release follows. The entire release can be read here.

ATK Announces Plan to Create Two Independent, Publicly Traded Companies Committed to Leadership in Outdoor Sports and Aerospace and Defense

Spin-Off of ATK’s Sporting Group and a Merger between ATK’s Aerospace and Defense Groups and Orbital Sciences Corporation

ATK and Orbital to Jointly Host and Webcast an Investor Conference Call at 9 a.m. EDT on April 29, 2014

Arlington, Va., April 29, 2014 – Alliant Techsystems Inc. (“ATK” or the “Company”) (NYSE: ATK) today announced that its Board of Directors has unanimously approved a plan to create two independent, public companies with leadership in Outdoor Sports and Aerospace and Defense (A&D). The board approved a definitive agreement that provides for the tax-free spin-off of the Company’s Sporting Group (“Sporting”) to ATK shareholders. The spin-off will be immediately followed by a tax-free, all-stock merger between ATK’s Aerospace and Defense Groups (“ATK A&D”) and Orbital Sciences Corporation (“Orbital”) (NYSE: ORB), pursuant to which Orbital shareholders will receive shares of ATK common stock as consideration. Upon completion of the transaction, ATK will change its name to Orbital ATK, Inc. (“Orbital ATK”). Current ATK shareholders will own approximately 53.8 percent of Orbital ATK on a fully diluted basis and current Orbital shareholders will own approximately 46.2 percent. Approximately $1.7 billion of existing ATK debt will remain at Orbital ATK.

“We are creating two strong, standalone companies committed to sustained leadership and success in their markets,” said Mark W. DeYoung, President and Chief Executive Officer of ATK. “ATK’s Board of Directors and management team continuously evaluate opportunities to best position the company to drive value for its shareholders. This transaction presents a compelling opportunity to position and build strong, durable and focused enterprises that deliver innovation,
execution excellence and enhanced opportunities for our customers, partners and employees, and thereby deliver long-term shareholder value. Orbital has been a customer of ATK for more than 25 years; we are familiar with each other and each company’s capabilities, and our respective cultures share a commitment to innovation and excellence. This alignment provides a solid opportunity to deliver great products to our customers at affordable prices with the opportunity to capture significant synergies.”

“The Board of Directors believes this plan provides a compelling opportunity for ATK to continue to deliver solid shareholder value and for both companies to excel in their respective businesses,” said General Ronald R. Fogleman, USAF (Ret.), Chairman of ATK’s Board of Directors. “We believe both companies will be better able to support and respond to the needs of their markets and customers, creating a stronger player in the A&D industry, while unlocking the potential to grow the value of the ATK Sporting Group.”

“This merger-of-equals combination of Orbital and ATK brings together two of the space and defense industry’s most innovative developers and cost-efficient manufacturers who have worked closely together for over 25 years,” said David W. Thompson, Orbital’s Chairman, President and Chief Executive Officer. “By building on complementary technologies products and know-how and highly compatible cultures, Orbital ATK will deliver even more affordable space, defense and aerostructures systems to our existing customers and be well positioned to expand into adjacent markets.”

Spin-off of Sporting

ATK operates in three business segments today: Aerospace Group, Defense Group, and Sporting Group. The company has grown significantly over the past two decades through organic growth and acquisitions, building leadership positions in several core and adjacent market segments.
The company’s Sporting and A&D businesses operate in two fundamentally different markets with very different operating dynamics, compliance requirements, customer sets and growth opportunities. As standalone companies, they will be more focused businesses, with clear and distinct strategic visions and objectives, additional operational flexibility and the financial strength to make the most of their unique opportunities in their respective industries.
Since entering the commercial ammunition and sporting accessories space in 2001, ATK has built a leading position in the shooting sports for hunters, shooting enthusiasts and law enforcement professionals. The acquisitions of Savage and Bushnell in 2013 enabled ATK to expand its core competencies while creating opportunities to enter into new, adjacent markets in the outdoor recreation industry.

In today’s growing market, the Sporting Group enjoys expanded distribution for some of the most widely known and respected brands in the industry: Federal Premium, Bushnell, Savage Arms, BLACKHAWK!, Primos, Final Approach, Uncle Mike’s, Hoppe’s, RCBS, Alliant Powder, CCI, Speer, Champion Targets, Gold Tip Arrows, Weaver Optics, Outers, Bollé, Cebe, and Serengeti.
“Sporting continues to deliver excellent performance,” said DeYoung. “Results from our recently completed fourth quarter demonstrated continued revenue and earnings growth, and margin expansion. Full details on our fourth quarter results will be discussed on our May 15 earnings call.”
ATK believes that separating Sporting into a standalone entity will facilitate opportunities to further drive growth and marshal resources to broaden and deepen its market leadership. ATK believes that a more focused corporate leadership team, operating within a clearly defined commercial market with a competitive business model, will contribute to unlocking significant value for ATK shareholders. Following the completion of the transaction, Sporting will also enjoy a strong balance sheet that will provide the ability to fund its growth strategy. Over the past 10 years, ATK’s Sporting Group has delivered annual sales growth of approximately 16 percent (14 percent organic growth).
Sporting is expected to be a world leader in outdoor recreation products with adjusted pro forma last twelve months ended December 2013 (LTM Dec) revenues of $2.2 billion1 and LTM Dec 2013 adjusted EBITDA of $361 million2 (see reconciliation table for details).


Steve Johnson

Founder and Dictator-In-Chief of TFB. A passionate gun owner, a shooting enthusiast and totally tacti-uncool. Favorite first date location: any gun range. Steve can be contacted here.


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  • flyingburgers

    Deja vu: this brings memories of the split of ATK away from Honeywell and the purchase of Thiokol.

  • M

    “ATK Orbital will take control of the Lake City Army Ammunition Plant and will sell ammunition to the sporting company”

    So one half of a company will sell its products to another half? That makes not sense. Hey I’m gonna go make a ham sandwich and sell it to myself yay!

    • gunslinger

      actually, in the business world, it does. I’m part of a company like that. our company can get prduct X cheaper than the sister company. or sister company can get us product y cheaper…but in order to “maintain” being a seperate company we have to make a profit from items being sold frome one to the other.

      hell i remember working at mcdonalds and the managers were saying how some of the equipment used was from a company that mcdonalds owned yet we still had to pay for it. so…

      • nova3930

        Yep, legally they will be two separate companies. If one just givest stuff to the other, they’ll get into legal troubles when audit time comes…

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

      From a business standpoint it happens all the time.

    • Aaron E

      In addition to what the others said, I would imagine that there are some tax benefits in that type of arrangement as well. A business “expense” for one company, and if the sale is just barely a “profit” for the other, than not a real tax burden for them. Overall the umbrella company probably comes out better off.

  • Geoff a well known Skeptic

    Interesting. I wonder if this is a play for Remington…hummm….Geoff Whose mind boggles at the implications.

  • 1911a145acp

    Does this mean I WON’T be able to order one of those rocket motors on my FFL anymore?