ATK Prepares for $4.5 Billion Merger, Splits Sporting Division into New Company
OutdoorHub Reporters 05.01.14
Alliant Techsystems Inc. (ATK) announced on Tuesday that it will be merging its defense and aerospace divisions with satellite manufacturer Orbital Sciences, while its popular sporting division will be spun off as its own separate entity. ATK Sporting Group is a giant in the ammunition industry, owning brands such as Federal Premium, CCI, Speer Ammo, and Blazer. Other brands listed under the ATK Sporting Group include rifle-maker Savage Arms, optics manufacturer Bushnell, BLACKHAWK!, and Hoppe’s. Upon completion of the $4.5 billion merger, ATK will change its name to Orbital ATK.
“We are creating two strong, standalone companies committed to sustained leadership and success in their markets,” said Mark W. DeYoung, president and CEO of ATK. “ATK’s Board of Directors and management team continuously evaluate opportunities to best position the company to drive value for its shareholders.
DeYoung will take over as CEO of ATK Sporting Group following the merger, while current Orbital CEO David Thompson will become the new chief executive officer of the combined Orbital ATK. Current ATK shareholders will own about 53.8 percent of the new company while Orbital shareholders will own 46.2 percent.
“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,” Thompson said.
Investors seem to agree, and the Star Tribune reported that ATK’s stock got an eight percent boost in early trading on Tuesday, while Orbital’s stock jumped an even more impressive 16 percent.
According to DeYoung, the division came about because the aerospace and defense side of the company operated in a fundamentally different market from its sporting division. As a standalone company, the Sporting Group will have greater flexibility in pursuing its own goals independent of Orbital ATK. With decreased government spending on space and defense, ATK’s sporting division has become one of the most profitable for the company, bringing in $2.2 billion in revenue at the end of last year. According to Cowen & Co. analyst Gautam Khanna, the unit could easily become a $3 billion business in its own right.
“Sporting continues to deliver excellent performance,” said DeYoung. “Results from our recently completed fourth quarter demonstrated continued revenue and earnings growth, and margin expansion.”
The transaction is expected to close by the end of calendar year 2014. Orbital ATK will remain in Virginia while the sporting division is expected to move to Utah. ATK did not go into detail on what jobs may be eliminated, moved, or added but did say that the new combined company will employ 13,000 workers in 17 states. The Sporting Group will employ 5,800 across 11 states.
