Acme United Sells Camillus & Cuda – Balance Sheet In Excellent Shape

Acme United Corporation (US: ACU – $33.09) has sold its Camillus knives and Cuda fishing product brands to GSM Holdings, Inc for $19.8 million.

This is a logical step for Acme, as the growth opportunities for these brands were limited while owned by Acme due to the fierce competitive landscape, but very exciting for a company like GSM with significant scale in the outdoor space.

In addition, with these brands out of its portfolio, Acme can now invest more resources and manpower to grow in the areas where it’s already strong, first aid and school & office products.

Walter C. Johnsen, Chairman and CEO, said, “The sale will allow us to place an increased focus on our primary product lines. The Company intends to use the net proceeds of the sale to pay down approximately $15.0 million of bank debt. We expect the sale to be approximately earnings breakeven after elimination of expenses associated with the Camillus and Cuda product lines and interest savings resulting from reduction of bank debt.”

Expanding the Brands

Founded in 1999, and based in Irving, Texas, GSM specializes in developing and marketing innovative products for the hunting, sport shooting, and outdoor enthusiast market. GSM owns several industry-leading brands including Stealth Cam, Walker’s, Muddy, Hawk, Big Game, Birchwood Casey, Cold Steel, TruGlo, SME, TekMat, GPS Bags, CrossFire, HME, Skull Hooker, Viking Solutions, Hunters Specialties, Western Rivers, Cyclops, Boss Buck, American Hunter, and NAP.

GSM’s products are sold through online retailers, sporting goods stores, mass merchants, outdoorsman retailers, and dealers/distributors across the U.S. and Canada.

The Camillus brand adds another pillar to GSM’s already premier lineup of cutlery brands.

“We have a strategic vision for the Camillus brand,” said Edward Castro, CEO, GSM Outdoors. “By engaging our customer relationships, utilizing our best engineering practices, and maintaining superior manufacturing, we are confident in GSM’s ability to continue growing Camillus into a brand that everyone knows, trusts and depends on for years to come. We are thrilled to be the stewards of the next chapter in Camillus’ rich history and adding them to the GSM family.”

As for Cuda, GSM said that the acquisition fills a vital need in its growing fishing portfolio.

“We recognize the tool and accessory category as an integral piece of the fishing experience, and something that was missing from our portfolio,” explained Crispin Powley, SVP of Fishing, at GSM. “When researching the category, the Cuda brand became the benchmark for what we found ourselves comparing every other brand to.”

“We have an incredible vision for Cuda building off its tradition of quality products that add value for anglers everywhere,” added Mr. Castro. “Utilizing our customer relations, top-notch engineering, and quality manufacturing, we strongly feel that we can grow Cuda into a brand that all anglers will rely upon.”

Conclusion

This deal is a clear win for all parties involved. As for GSM, this acquisition ensures its further expansion into the fishing and cutlery segments of the outdoor industry. They have shown many times in the past that they are able to fit in a new brand into their existing portfolio and expand its worldwide reach.

Acme will recognize an after-tax gain on the sale of approximately $10.0 million during the fourth quarter of 2023. As a result of this transaction, the Company’s bank debt will the lowest that it has been in many years, which is important in this relatively high interest period. Smallcaps Recommendation: BUY.

Smallcaps.us Advice: Buy	Price Target: $59.86	Latest Company Report (pdf)
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