Italian gun manufacturer Beretta is reportedly engaged in a contentious situation regarding a potential acquisition of as much as 50% of Sturm-Ruger, the largest firearms producer in the U.S. This conflict, marked by heated discussions and internal disputes lasting several months, has escalated to the point where threats of “war” have been made, according to reports.
Based in Hartford, Conn., Sturm-Ruger recently retracted a bold statement during its latest proxy filing, cautioning its European competitors about the possibility of losing their influence if the U.S. government intervenes on national security grounds.
If Beretta proceeds with its takeover, it would place a significant American defense and firearms manufacturer under foreign control, which some might find concerning.
In a call on March 9, Beretta’s general manager, Robert Eckert, told CEO Todd Seifert that the company aimed to swiftly acquire a 25% stake through new stock offerings, followed by another 25% to secure a majority at a prearranged price.
The recent proxy statement, filed in conjunction with the company’s annual meeting, does not clarify whether a formal offer has actually been submitted.
As previously reported, Beretta, which is managed by its parent company based in Luxembourg, quietly gained a 9.95% stake in Sturm-Ruger and appointed four individuals to its nine-member board earlier this year.
On March 25, Beretta made a partial offer to purchase an additional 20% at $44.80 per share. This proposed increased stake would trigger a mandatory review by the Committee on Foreign Investment in the United States, raising alarms about foreign ownership of U.S. defense industries.
“Beretta’s pursuit of board positions would activate a review focused on critical national security issues,” noted Sturm-Ruger, claiming that the Italian company has made consistent aggressive demands and issued threats of retaliation if these weren’t met.
Legally, companies and their potential buyers are required to be transparent about any ongoing negotiations or bids, whether they are hostile or amicable.
The debate has involved Sturm-Ruger engaging its “poison pill” strategy, originally enacted last year to counteract acquisition attempts by flooding the market with new stock, thus making takeovers more expensive.
Sturm-Ruger’s board is actively urging shareholders to oppose Beretta’s advances during the upcoming annual meeting and is gearing up for a significant proxy fight.
Potential candidates backed by Beretta include notable figures such as William Franklin Detwiler of Fernbrook Capital and Mark DeYoung, previously CEO of Vista Outdoor.
Beretta, established over 500 years ago and currently led by its 15th successor, Pietro Gussari Beretta, seeks to capture a larger share of the lucrative U.S. firearms market.
Amid sluggish sales stemming from the pandemic, Sturm-Ruger has seen its stock price plummet by over 40% in five years, leaving its market capitalization around $653 million, with stock trading at approximately $40.97.
Sturm-Ruger and Smith & Wesson have historically been the primary competitors in the U.S. firearms industry, each vying for leadership in civilian gun sales. Both companies continue to contest for dominance in the market.
Beretta, with substantial sales projected at $1.7 billion in 2024, is eager to explore potential synergies between these two major players, aiming to enhance profitability and reduce operational costs.
Historically, Beretta has supplied arms to Venezuela’s military and National Guard and has long looked to expand its footprint in the U.S., where it already owns the manufacturing firm Steger located in Maryland.
