I'm sure this may come as a shock to some who consider Taurus to be a bush league player in the firearms business.
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Gun Ban No Obstacle to Taurus Bid for Freedom: Corporate Brazil
By Christiana Sciaudone - Jan 17, 2013
Brazilian gunmaker Forjas Taurus SA (FJTA4) is emerging as a likely bidder for Freedom Group Inc. as analysts bet that proposed U.S. gun controls will fail to deter demand in the world’s largest consumer firearms market.
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Taurus, the acquirer of U.S. revolver maker Heritage Manufacturing Inc. last year, would be a good suitor for all or part of Freedom Group, according to brokerage Coinvalores and Wedbush Morgan Securities. Taurus, which said in November that it’s “analyzing acquisition opportunities”
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“Despite recent tragedies, they still look to the U.S. market with a lot of optimism,” Bruno Piagentini Caloni, an analyst at Sao Paulo-based Coinvalores, said in a telephone interview. “One of its growth strategies is through the acquisitions of small companies that already have a traditional presence in North America.”
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Taurus, the world’s second-largest gunmaker by revenue, has gained 66 percent in the past year, outpacing a 2.4 percent increase for Brazil’s benchmark Bovespa index. Smith & Wesson (SWHC) Holding Corp., the largest gunmaker by revenue, rose 92 percent, while No. 3 maker Sturm Ruger & Co. advanced 33 percent.
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The U.S. generated 55 percent of Taurus’s net income of 505 million reais ($248 million) in the first nine months of last year.
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Sales at Madison, North Carolina-based Freedom in the first nine months of 2012 rose 20 percent to $677.3 million.
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Forjas Taurus posted about $265 million in revenue in the same period. It has six factories in Brazil as well as one in Miami and currently controls 19 percent of the U.S. market, Piagentini said. Dionisio places the company among the top 10 handgun manufacturers worldwide.
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Freedom Group may fetch $745.7 million to $1.13 billion in a sale, based on the ratios of enterprise value to Ebitda, or earnings before interest, taxes depreciation and amortization, of publicly traded competitors such as Smith & Wesson and Sturm Ruger (RGR), data compiled by Bloomberg show.
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