Smith & Wesson to become a standalone gun business
American Outdoor Brands has announced plans to split its firearms unit, Smith & Wesson, from its outdoor products business, citing "changes in the political climate."
The firm said in a statement Wednesday that it would create two independent, publicly-traded companies. The restructuring is expected to be completed in the second half of next year.
Existing shareholders will receive stock in two companies: American Outdoor Brands, which will sell products including knives and fishing gear, and the guns business, Smith & Wesson Brands.
"There have been significant changes in the political climate, as well as the economic, investing and insurance markets" since American Outdoor Brands began efforts to diversify away from guns, chairman Barry Monheit said in a statement.
Shares in American Outdoor Brands have plummeted nearly 40% this year as US gun manufacturers face a backlash from consumers and investors over the use of their products in mass shootings. A rifle manufactured by American Outdoor Brands was used in a 2018 mass shooting that killed 17 people in Parkland, Florida.
Some consumers have boycotted Smith & Wesson products, denting sales. American Outdoor Brands has also been forced to defend its business practices against the likes of Blackrock, one of the world's biggest asset managers and a major shareholder in the company.
The industry has also suffered a decline in sales prompted by the election of President Donald Trump, who is viewed as unlikely to support tighter restrictions on gun sales or ownership.
Firearms accounted for more than 75% of American Outdoor Brands' revenue in the most recent quarter.
Separating American Outdoor Brands into two companies will better enable each to deliver on its strategic and spending priorities, creating more value for shareholders, CEO James Debney said in a statement.
Debney said the board had granted his request to lead the outdoor products business. Mark Smith, who currently leads the firearm manufacturing operations, would become CEO of Smith & Wesson Brands.
The restructuring announcement comes one day after the US Supreme Court said it will not stop families of Sandy Hook victims from bringing a case against Remington Arms Co., the embattled manufacturer of the semi-automatic rifle that was used in the 2012 mass shooting at the elementary school.
While federal law protects gun manufacturers from wrongful death lawsuits brought by family members, the Sandy Hook families are seeking to hold Remington accountable for its marketing practices. The ruling opens the door to further cases against gun manufacturers.
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