Smith & Wesson has been buying up smaller companies that complement its own firearms product line. The latest acquisition is laser powerhouse Crimson Trace.
Crimson Trace is well known for providing aftermarket aiming lasers for handguns and has diversified somewhat in recent years. However, the company derives a significant portion of its revenue from being an OEM provider of lasers to firearms manufacturers.
One of Crimson Trace’s largest revenue sources has been Smith & Wesson. According to S&W, roughly 25% of the Crimson Trace revenue comes from Smith & Wesson. That figure alone makes the company’s acquisition important to Smith & Wesson, as it holds the potential to increase the company’s overall margin on guns sold with lasers.
However, that is not the sole motivator for Smith & Wesson.
S&W has made numerous accessory company acquisitions in the recent past, and these kinds of acquisitions are part of the company’s long term strategy for growth in the industry.
Earlier this month, Smith & Wesson announced the purchase of Taylor Brands – a company that makes knives under several brand names including Schrade and Old Timer.
In January, Smith & Wesson announced it was buying flashlight manufacturer PowerTech through Battenfeld Technologies. Battenfeld is a company acquired by Smith & Wesson in late 2014 that includes brands like Caldwell, Tipton and Frankford Arsenal.
The acquisition of Crimson Trace should be finalized before the end of August.
Smith & Wesson is not acquiring a struggling company. Crimson Trace sports a compounded annual growth of revenue in excess of 10%. Crimson Trace currently manufactures more than 225 different products and has several new technologies in development. For the trailing 12 months, Crimson Trace has seen revenue of approximately $44 million.
According to Smith & Wesson, the purchase is being made for all outstanding stock – even that which is held by private equity firms, members of management and other parties. The total purchase price is expected to be $95 million, which Smith & Wesson is paying in cash.