Alliant Techsystems to acquire Blount ammunition maker
Susan E. Peterson
Star Tribune
Published Nov 14 2001
Alliant Techsystems Inc. of Edina said Tuesday that it has
reached a definitive agreement to acquire Blount
International's munitions business for about $250 million in
Alliant stock. The deal will mean the return of Anoka-based
Federal Cartridge Co. to local ownership and will make Alliant
the nation's largest supplier of small-caliber ammunition.
Although company officials and industry-watchers expect the
acquisition to be a good fit, Alliant's shares took a hit Tuesday,
falling $6.55 a share, or nearly 8 percent, to close at $77.20.
The stock price decline was mostly related to positive news on
the war front in Afghanistan, said analyst Peter Arment of
JSA Research. Alliant, which makes munitions and
rocket-propulsion systems, is one of a number of defense firms
whose shares have risen sharply since the Sept. 11 terrorist
attacks. Its stock closed at $65.29 on Sept. 10 and rose to a high
of $93.40 on Oct. 8, before giving back some of the gains in
recent weeks.
With the Taliban pullout from Kabul, "the perception is that
the war is over," Arment said. That perception led to an
average decline of about 2 percent Tuesday for defense stocks.
"Alliant was hit a little harder" because it announced plans to
issue shares worth about $250 million to Blount in the proposed
deal, he said.
Even though the Blount acquisition is expected to add to
Alliant's earnings in the current fiscal year and beyond, "Wall
Street sometimes is very short-minded," Arment said.
In a conference call with analysts and other observers, Alliant
CEO Paul David Miller said that pending regulatory approval,
Alliant expects to close the deal in its fiscal third quarter,
which ends Dec. 31. The deal should add $50 million to $65
million in sales in the current fiscal year, he said, and the
addition of Blount's $250 million to $275 million in fiscal 2003
would push Alliant's annual sales to the $2 billion mark.
Miller said earnings from continuing operations for fiscal 2002
would be "at the high end of our previous guidance" of $3.60 to
$3.63 per share. Also, he raised his estimates for Alliant's fiscal
2003 to $4.17 to $4.21 per share, excluding extraordinary
charges.
He said the Blount business would strengthen Alliant's
munitions unit, one of its two "anchor" businesses. "It
diversifies our market of opportunity, bringing [Alliant] into
the civil and law-enforcement ammunition markets, and
enables us to expand more rapidly in new lines, [such as]
environmentally friendly or 'green' ammunition and the
growing area of less-than-lethal ammunition."
Federal Cartridge, which makes sporting ammunition, is one of
the Blount operations included in the deal. Blount, based in
Montgomery, Ala., bought Federal Cartridge from Pentair Inc.
of Roseville in 1997 for about $112 million in cash.
-- Staff writer Patrick Kennedy contributed to this report.
-- Susan E. Peterson is at sepeterson@startribune.com .
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