How did Roundhill buy the Remington Arms brand for only $13M?

Discussion in 'General Gun Discussions' started by Solomonson, Oct 14, 2020.

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  1. Solomonson

    Solomonson Member

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    I'm curious how the Roundhill Group LLC bought Remington's (non-Marlin/DPMS/H&R/Stormlake/AAC/Parker/ Franklin Armory/Bushmaster) firearms business (not including ammo or supplies) for only $13M? Did they get the brand name in the deal?

    Remington makes great/legendary shotguns, despite hard competition from Mossberg/Maverick. They make arguably the finest medium-priced bolt action rifles (despite the safety controversy) in the business. There's great potential for their rimfire rifles and their handguns as well.

    One thing pulling the price way down would likely be taking over responsibility for the antiquated Ilion Plant (it originally opened in 1828.) Only goodness knows how much chemical clean-up may one day be required? Hundreds of millions, that's for sure.

    I recall a number of years ago, a resurrected/fixed Savage Arms sold for something like $300M. Ruger even paid $30M for the Marlin assets. Still, $13M sounds like quite a deal...
     
  2. mcb

    mcb Member

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    There have been several threads on this. But in short a least one member of Roundhill has a long standing business relationship with the current CEO of Remington. It was all disclosed in the bankruptcy documents and yet still stinks to high heaven.

    Roundhill for $13M got all of Remington's Ilion's facility (~1 million square feet) and most of the facilities equipment, except for the equipment the accountants said belong to Marlin. They also got the Storm Lake facility in Tennessee and the Custom Shop in South Dakota.
     
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  3. Carl N. Brown

    Carl N. Brown Member

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    WWI.
    J. M. Marlin was bought by Rockwell to produce military weapons.
    Post WWI, Rockwell dumped Marlin. No interest in staying in the civilian gun market.
    The McKenna family at the urging of Marlin employees bought Marlin, assets and debts, at sheriff's tax auction.
    Theoretically, the McKennas cudda lost their shirts, but turned Marlin back to a thriving brand.

    The current thing with Remington, who knows?
     
    Last edited: Oct 14, 2020
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  4. Obturation
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    Obturation Contributing Member

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    I'm not an expert, just a consumer so I'll give my impression, it may be way off.

    Simply put, Remington hasn't made anything even remotely attractive to me for a long long time. Bolt action rifles that are every bit as accurate can be bought new for $300-$400 , their pump shotgun (870) is all wrong in my hands (had one a few years back that had some of the worst machining I've ever seen), their pistols are not better than any other at any price (many are known to be unreliable ) and the market doesn't support them like they do for glock,cz,colt,ECT. So that leaves basically nothing that a guy like me, an average consumer would want . the Remington branded ammo is junk- I've had projectiles loaded backwards in a box of 45 acp umc, the 22 golden bullets don't work in almost anything, the rest of the ammo can be good but it isn't better than premium manufacturers and not cheaper either.

    The brand has been run into the ground by mismanagement and bad QC and that's a shame. There are people who grew up with Remington as a mainstay and remain loyal, people buying for the first time likely won't find anything in the catalogue that is appealing. People who have guns already won't find anything that's different or special.

    Just my opinion as a consumer. $13m may be over paying...
     
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  5. George P

    George P Member

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    1 million SF of 200 year old building and a lot of outdated equipment, along with a union contract and a state that is highly antigun
     
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  6. MAKster

    MAKster Member

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    Roundhill bought Remington for only $13 million for the same reason you can buy a 10 year old Mercedes for less than a used Honda. To get the real price you have to include all the money you are going to have to spend to get it operating right. Roundhill is going to have to spend probably $100 million to fix Remington.
     
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  7. DocRock

    DocRock Member

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    Because nobody outbid them.
     
  8. spraay

    spraay Member

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    I'm not sure they got a deal. I think highly of the 870 shotgun (have 2) and the Model 700 rifle (really like that), but I'm not sure much of the newer stuff is really special or appealing. Coupled with the old facilities, the lawsuits and many other reasons mentioned here, I'm not surprised there wasn't a lineup of potential buyers.
     
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  9. mnrivrat

    mnrivrat Member

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    Just getting back a turned off customer base is going to take a good deal of time and money. It will take some good management to clean up the brand. It is also pretty much a guess at this point what they are buying. What assets, and what liabilities.
     
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  10. WestKentucky

    WestKentucky Member

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    I’m putting on my work hat for a second... I’m an EHS manager and have seen some industrial messes. I have also been part of a couple cleanups that I inherited.

    200 year old facility sounds really cool, but in reality what that means is maintenance nightmare for upkeep, lots of risk for abating all kinds of stuff (almost guaranteed to find asbestos somewhere) from spills, poor practices in days past, and deliberately deceptive practices of burying things. There is great financial risk at that plant without even considering anything beyond real estate. Cradle to grave laws, Superfund, SARA, and especially CERCLA are things to be mindful of, but with all things the current owner is the one most liable until the bank account runs dry. The best thing that could happen to that facility (for current owners anyway) honestly is for it to be used as a warehouse rented out to industrial groups to store old crap that nobody wants to see anymore because that means less movement, less people, less exposure, and less eyes to find that smoking gun that gets the big bucks rolling... and thanks to CERCLA if they can tie another company to an illegal waste site then they buy into the cleanup as well unless they can prove that they didn’t contribute to the mess. Lease it out cheap, fill it up fast, and let it scrape by just covering the taxes on the property as a break-even or low profit investment.

    There are also some stupid things that may or may not apply. Some environmental laws exist such that once you make the naughty list your stuck on it essentially forever. Title V air permits for example. It’s not hard to comply because each permit is essentially a manual on how to run your program to stay in compliance, but the permittee has a big say in how the original document is written, and if it’s antiquated or expensive to follow it needs revised and revision takes a lot of legal legwork which means $$$$$. Roundhill wasn’t there to have a say in any of the permits or means of compliance that are written into the permits, so again, risk of fines for running afoul of Mr Cuomo and his appointed environmental goons.

    Now we get into equipment. Machinery used to make anything in industrial scale is going to fall under OSHA or a state run program very similar to it. The kicker here is that many states allow for machinery to be guarded only to the standard which was applicable at the time when the machine was built or last overhauled. We are talking about machines that likely need major work, so there will be expense there, expense on the safety side as well making it meet modern standards following the overhauls, and further financial risk until the machinery is brought up to code. I haven’t seen the equipment so I can’t even roughly guess as to what the expense will be, but it is likely to be substantial bordering on astronomical to do it right. Some states per my understanding want equipment brought up to code when it is operated by new owners as it has technically been recently acquired and by such logic it must meet current standard. I feel like NY probably found that logic by now.

    On to the topic of the guns themselves. Remington kinda sucks. I hate to say it and I really hate to be so blunt about it, and I like Remington. Model 700 is an old design. It’s old enough that all protections on it have either expired or are expiring and there are already SEVERAL players in the game outplaying Remington at the game Remington invented. Same for the 870. 1187 and 1100 I’m not so sure about but they are basically all antiquated designs by any stretch of the imagination. Versamax maybe has some value and some proprietary protections but I’m not sure, and I don’t know anybody who has recently been excited about ANY Remington firearm product. Adding insult to injury is a state hostile towards their product and likely a workforce who also is at least in part morally opposed to producing those evil pieces metal called guns.

    So where are we... we are left with a company making products in a limited market for product sales, in a company recently known for questionable quality and dangerous products that are made on antiquated equipment sitting in a maintenance nightmare building with god knows what under the floor and in the dirt, in a state that hates us from the legislature down. There are risks of fines, fees, and expense at every turn, and since its one of the biggest names in the industry everybody is watching and waiting for the first big blowup to happen... and they BOUGHT this mess for 13 million. No thanks.

    And meanwhile the investment bankers who used Remington as a cash cow to strip assets and run it into the ground now have Some degree of financial responsibility forever for any remediation work that has to be done on the site. 13 million is a bad deal for them. Yeah they got rid of the mess, but expenses could easily top what they got for the business. Their best bet would have been to transfer the property out of Remington through an inside sale of the real estate so that they maintain control and avoid risk. Sometimes it’s best to let sleeping dogs lie, or in this case let sleeping dogs be turned into rented warehouse space.
     
  11. Sooner1911

    Sooner1911 Member

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    In my view, any value is in the brand itself and not the facilities and the equipment that is encumbered with age, wear, etc. The brand, as many have mentioned, has been hurt greatly because of mismanagement, QC problems, poor customer service, and a failure to keep pace with other products in the marketplace. At then end of the day, the buyer paid $13 million and no-one else bid more. Whether there was an existing relationship with the former CEO does not matter as the decision was made by the bankruptcy court, not former management. If someone (Ruger, FN, or even someone like Beretta) thought there was more value in it, those companies had the financial wherewithal to make a bid. They didn't and $13 million was what the market would bear,

    Regards,

    Kris
     
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  12. Solomonson

    Solomonson Member

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    Very interesting... The REMINGTON name alone (presuming they got it?) is worth far more than $13M alone.
     
  13. Solomonson

    Solomonson Member

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    I don't think it sounds "really cool." There was almost certainly "settling ponds" for chlorinated petroleum cutting fluids on that Ilion property -- particularly during wartime. for generations. The clean-up costs could be staggering. 8-9 figure staggering.

    Unless it was a dirty deal as at least one person suggests, it's the clean-up liability of the Ilion Plant that allowed Remington Arms to be purchased for $13M. A staggering bargain.
     
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  14. Solomonson

    Solomonson Member

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    It was done with Savage, and Savage had no where near the product line or the reputation of Remington. It also wasn't saddled with an old plant.
     
  15. Solomonson

    Solomonson Member

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    That union contract, and the fact it's in NY State are two other big factors indeed.
     
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  16. Solomonson

    Solomonson Member

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    I don't think anyone is saying the Ilion Plant is adding a great deal of value to the deal. Quite the opposite in fact.
     
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  17. Solomonson

    Solomonson Member

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    So there does indeed seem to be a number of reasons why Roundhill was able to buy Remington Arms for only $13M:
    • Huge potential clean-up liability of Ilion Plant.
    • A union contract at said plant.
    • NY State is not a cheap place in which to manufacture.
    • Stigma of investing/owning firearms makers by larger sporting goods concerns and investment groups.
     
    Last edited: Oct 15, 2020
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  18. Seamaster31

    Seamaster31 Member

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    The price included assumption of certain liabilities in addition to the thirteen million cash payment, so the total price is higher than most people think.

    There are internet experts on seemingly every site that are speaking without knowing.
     
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  19. jmr40

    jmr40 Member

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    Correction, "Remington USED to make great/legendary....." The only current design that is relevant is the 870. Everything else they make has been surpassed in both quality and design by most everyone else. For the last 50+ years Remington has been slow to innovate and improve their products. They've been left in the dust by other manufacturers. In 1970 the Remington name still meant quality, but today the Remington name is synonyms with low quality old defective designs.

    Remington's woes go all the way back to the 1940's and the ill conceived model 700 family of rifles. No other rifle design has cut more corners to produce a cheaper to build rifle than the 721, 722, 725, 700, and model 7 rifles. Despite the many manufacturing short cuts they did garner a reputation for accuracy, but durability issues have plagued them since the beginning.

    The flawed trigger design was discovered almost immediately, but not corrected. That decision proved to be the single biggest problem for Remington. They've been sued over 100 times going back to the 1960's. Most were settled out of court, but the hundreds of millions of dollars they spent since the 1960's paying off lawsuits and the lawyers to defend them could not be used to innovate and upgrade.
     
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  20. Shanghai McCoy

    Shanghai McCoy Member

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    Based on that it makes ya wonder why they payed so much...? o_O
     
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  21. WestKentucky

    WestKentucky Member

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    Cutting fluids almost certainly, likely bluing chemicals, possibly chrome plating compounds. Abatement nightmare.
     
  22. Scott.M

    Scott.M member

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    I wouldn't give a nickel for anything in NY.

    I sure hope Remington can be viable again. Remington 700's and 870's are iconic as apple pie.
     
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  23. mcb

    mcb Member

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    1 million square feet... You could scrap all the machines in Ilion and get more than $13 million in scrap metal value. There is more than $13 million dollars in rotary hammer forges and rotary swaggers on the first floor of one of the larger buildings. There are over a dozen 4-story buildings at the Ilion site. The museum and gun-library could probably be auction for several million themselves. We have not even talked about the equipment and property at Storm Lake and the Custom Shop. $13 is a deal if you have the brains to manage it right.
     
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  24. brewer12345

    brewer12345 Member

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    The other issue is that the negative swirl the left has created around the firearms industry means that a lot of bottom fishing investors are categorically forbidden from investing in such things and the ones that are not would be reluctant. Choke off the supply of capital and valuations go lower.
     
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  25. Solomonson

    Solomonson Member

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    Nah. They still do. At least until they ran out of materials.
     
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