Gun Fans Recoil at Marlin Deal

Making sense of unexpected Remington acquisition

It was a shot heard around the world: North Haven’s Marlin Firearms was to be sold to Remington of North Carolina.

Fans of the company’s popular rifles and shotguns lit up Internet message boards last month as the news spread, many fearing that yet another American firearms maker would shut down or outsource.

But as details of the deal come to light, analysts and city officials say Marlin’s sale may turn out to be a canny move both by a local company shifting its focus and a private equity giant seeking profits.

Unlike local firearms casualties like U.S. Repeating Arms Co., Marlin has prospered in recent years as its products have found new markets. Marlin makes a range of centerfire, bolt-action and lever-action rifles used for target shooting and hunting. It also sells European-made small-bore shotguns.

Marlin is privately held and doesn’t release financial information, but Hoover’s put sales at $28 million last year, with analysts estimating healthy profits. Remington by contrast reported only $13.4 million in profit last year on sales of $496 million, considered a poor performance in that industry.

“Marlin has been showing a solid profit,” says Dean Lockwood, a weapons and firearms industry analyst for Forecast International in Newtown. “There is speculation that this acquisition was an effort to prop up Remington.”

The elephant in the room in the Marlin deal is actually a three-headed dog – private equity giant Cerberus Capital Management. Cerberus, named for the triple-crowned canine guardian of hell, bought Remington last April in a deal worth $370 million after buying assault-rifle maker Bushmaster the year before.

New York-based Cerberus, famed as much for its secrecy as its high returns, also picked up two military weapons makers last year, Cobb Manufacturing of Georgia and DPMS Panther Arms of Minnesota.

Remington’s purchase of Marlin may be a sign that Cerberus is making a major move into the sporting firearms market, Lockwood says.

“They now own a number of companies beside Remington, most focused toward military and law enforcement side,” Lockwood says. “Remington was the first they acquired that had sporting emphasis. With Marlin they are bringing in a known moneymaker.”

While the benefits of the Marlin acquisition are clear for Remington and Cerberus, why did Marlin – a family-owned stalwart of the Connecticut manufacturing community – decide to sell out?

Officials at Marlin referred all requests for comment to Remington’s headquarters, which did not return repeated phone calls.

But Ralph Durante, chairman of North Haven’s Economic Development Commission, says that Marlin’s management is shifting its focus away from firearms to its booming workplace communication division. As the Marlin Co., the firm makes electronic and wall billboards intended for in-house messages at big companies (BNH, April 2, 2007).

Marlin may move the communications division to a brand-new campus at Greenhill in Wallingford, built last year as the headquarters of the now-defunct Mortgage Lenders Network.

More than 300,000 square feet of space is currently available for lease at Greenhill, according to Jon Putnam, a senior director at Cushman & Wakefield in Hartford. Putnam will not confirm if Marlin is moving in, but says that he expects to lease at least part of the complex in the next few months.

“We’ve had a very healthy level of interest and we’re pleased with that,” Putnam says.

As for Marlin’s firearms division, Durante says he has had assurances from CEO Frank Kenna III that the plant would stay open for at least the immediate future and that workers would keep their jobs. He adds that town officials have been talking to the state about possible incentives to keep the plant open farther into the future.

“We’ve got to keep our manufacturing jobs,” Durante says.

Lockwood of Forecast International says that Marlin’s famed North Haven service operation – known for its quick and low-cost repairs and attentive customer care – is a big part of the company’s success.

“Their customer service is legendary,” Lockwood says. “They have a very loyal following.”

Also key in driving Marlin’s profits has been the boom in “cowboy action shooting,” a sport in which competitors dress up in Wild West costumes and test their target skill in scenarios based on famous shootouts or movie scenes. Shooters must use guns typical of the old West, such as single-action revolvers and lever-action rifles – Marlin’s specialty.

Since its debut in the 1980s, cowboy-action shooting has spread from California across the country and the sport’s main body, the Single Action Shooting Society, claims 75,000 members. Local clubs include the Ledyard Sidewinders and Congress of Rough Riders, based in Naugatuck.

“We have a very good time,” says Jack Ganson, who competes as “Johnny Pecos” at the Hartford Gun Club’s monthly cowboy-action event in East Granby. A 65-year-old retired college professor, Ganson dresses up as a working cowboy or gentleman rancher for the event, one of the largest in the Northeast.

“I grew up watching cowboys on the television in the 1950s,” Ganson says, explaining his interest in the sport. Marlin rifles are common in the shooting events, he adds. “It’s been a popular gun for many years.”

Cowboy-action shooters around the country have taken note of Marlin’s sale and are taking a “wait-and-see attitude,” says the executive administrator of the Single Action Shooting Society in Yorba Linda, Calif., who goes by his cowboy alias of “Wild Shot.”

“I suspect [Remington] is going to continue production in whatever way they find economical,” Wild Shot says, adding that he doubts the company would abandon a profitable market. Marlin rifles are common at action shooting events around the country, he adds, prized for their low cost, reliability and simple operation using a lever-action mechanism that was perfected in the 1890s.

But other Marlin fans lament the sale and are bracing for the outsourcing of yet another American firearms brand.

“The Marlin Firearms Company of North Haven, Connecticut lived a long life but died in the United States from a very contagious disease called greed,” wrote one poster on a Marlinowners.com forum. “The death of an American company, even one that I don’t work for or own stock in, always seems like the death of a friend.”

“What better way to kill our heritage as gunmakers in this country than to swallow up yet another company,” lamented another poster on a Field & Stream message board.

What’s left of the classic Winchester rifle line, once made by U.S. Repeating Arms of New Haven, is now manufactured overseas.

The Winchester plant in New Haven remains empty more than a year after manufacturing ceased there and is still listed for sale or lease on the Connecticut Economic Resource Center Web site.

But Lockwood of Forecast International, who calls himself a Marlin fan and owns several of the firm’s guns, says he hopes that the company’s track record as a money-maker will keep the guns in production.

“They have a sterling rep in the shooting community,” Lockwood says. “The line’s going to stay intact.”

By: Liese Klein – Connecticut Business News Journal