Beretta Just Bought 9 Percent of Ruger’s Stock, Prompting a Response
The 1980s-1990s stainless Mini-14 GB-F is an enduring work of beauty that hails from an age of VHS tapes when MTV played music. (Photo: Chris Eger)
Ruger responded to public filings and statements that an international firearms powerhouse has moved to purchase a significant amount of its stock.
On Sept. 22, Luxembourg-based Beretta Holding filed a mandatory report with the Securities and Exchange Commission that it had acquired a 7.7 percent ownership interest in Ruger without providing prior notification to the American-owned company, one of only two publicly traded firearms makers in the U.S.
The report filed with the SEC by Beretta said the company “anticipates engaging in discussions” with Ruger’s management and board of directors regarding “business, industry developments, and potential areas of operational and strategic collaborations.”
On Oct. 2, Beretta filed an amendment with the SEC clarifying that its stake amounted to 9 percent ownership in Ruger.
This week, Ruger disclosed that the company has tried to engage with Beretta since the filing of its initial SEC report “to learn more about Beretta’s plans and intentions without success,” and that Beretta has advised Ruger’s Board that “it would not, under any circumstances, sign a standstill agreement.” Such an agreement stipulates that an investor agrees to buy no more shares for a specified period.
In response, Ruger’s Board on Tuesday adopted and filed a one-year shareholder rights plan, which is triggered if any investor obtains 10 percent or more of the company’s stock. The plan, a commonly seen “poison pill” used to halt takeovers, gives shareholders – except the one exceeding 10 percent ownership that triggered the plan – the right to buy more shares at a steep discount. This would make a potential takeover attempt through stock purchase a steeper hill to climb, although not an insurmountable one. For instance, Twitter’s board adopted an ultimately futile rights plan in an attempt to fight off Elon Musk’s purchase in 2022.
“In light of the potential for Beretta to significantly increase its position in Ruger, the Board determined that adopting the Rights Plan is prudent to fulfill its fiduciary duties to all stockholders,” said John Cosentino, Jr., Chairman of the Board for Sturm, Ruger & Company, Inc. “Ruger looks forward to meeting with Beretta, a leader in the industry, and learning more about what operational and strategic collaborations they have in mind. We are open to any ideas for lasting value creation. Our Board and management team remain committed to providing quality and innovative firearms and delivering long-term value to our stockholders.”
Both Beretta and Ruger have a long history of acquiring other companies in the international firearms and optics space. Beretta currently owns the brands Benelli, Franchi, Uberti, Stoeger, Sako, Tikka, Steiner, Burris, and Chapuis Armes, among others. Ruger, meanwhile, has Marlin along with a host of former Marlin-owned brands, and recently acquired Anderson Manufacturing in a move to increase its AR-style production capability.