UK engineering group Tomkins PLC has announced that its subsidiary Tomkins Corporation has completed the sale of the entire share capital of Smith & Wesson Corp to Saf-T-Hammer, a company specialising in the development of safety and security devices for firearms.
Tomkins publicly announced in January its intention to sell Smith & Wesson as part of the continuing strategy of focusing the Tomkins group into three engineering and manufacturing business areas: Industrial & Automotive, Air Systems Components and Engineered & Construction Products.
Tomkins has already disposed of its Food Manufacturing interests and most of its interest in the Professional Garden & Leisure division. Smith & Wesson is the last remaining business of the Professional & Garden Leisure division to be sold.
The consideration for the equity capital is $15 million comprising $5 million paid on completion with the balance due in May 2002. Saf-T-Hammer will also pay on completion $20 million of an outstanding loan of $73.8 million due from Smith & Wesson to Tomkins Corporation. Of the remaining $53.8 million, $30 million will be repaid on an amortising basis over seven years commencing in May 2004 and $23.8 million will be included in the equity capital acquired by Saf-T-Hammer. Interest on the outstanding loan balance will continue at nine per cent per annum. Tomkins group has not indemnified Saf-T-Hammer against the liabilities, actual or contingent, of Smith & Wesson.
Smith & Wesson has its headquarters in Springfield, Massachusetts, and employs approximately 650 people. It operates from two manufacturing facilities in the US, and is a manufacturer of handgun products under the Smith & Wesson brand.
The turnover of Smith & Wesson for the year to 29 April 2000 was $112 million and it generated an operating profit of $13 million. Net tangible assets of Smith & Wesson at 29 April 2000 were $35 million. As disclosed in the interim results of Tomkins for the six months to 30 October 2000, Smith & Wesson reported an operating loss for the period of $4 million.
The accounting loss on disposal of Smith & Wesson to be recorded in the Tomkins group accounts for the year ended 30 April 2001 is estimated to be £66 million including goodwill of £42 million previously written off against reserves now passing through the profit and loss account.
Taking into account the proceeds in respect of the loan account and the cash balances which will be retained by Smith & Wesson after completion, the net cash outflow of the Tomkins group is of the order of £23 million.