If you’re a regular around here, you’re aware of the ownership stake that Beretta has taken in Sturm, Ruger. If you haven’t been following along, it was revealed last September that Beretta had purchased 7.735% of outstanding shares in the Connecticut gun maker. Things progressed from there, with Beretta increasing its ownership to 9.95%, just under the 10% threshold that would trigger the shareholder rights plan that Ruger put in place in response to the Beretta situation.
At the web site Beretta created to publicize its position in this fight, they have criticized Ruger’s management and financial performance as part of its attempt to secure four seats on the company’s board of directors . . .
Ruger’s years of underperformance happened on the watch of the same long-tenured directors who seemingly control the Board today. Do not be misled by the recent so-called “board refreshment.” We believe these directors still remain firmly in control, collectively representing more than 65 years of Board tenure and having overseen the period during which Ruger significantly lagged both its closest competitor and the broader market. These same directors own only about 1% of Ruger’s shares, giving them limited personal financial exposure to the Company’s performance. Instead of building meaningful ownership stakes alongside shareholders, the primary financial incentive keeping these directors in their seats appears to be their annual cash retainers. In our view, shareholders deserve a Board that is meaningfully invested in the Company’s success and accountable for its performance.
At the upcoming Annual Meeting, you will have the opportunity to elect four independent director candidates nominated by Beretta Holding. These nominees bring the skills and experience needed to help restore operational performance and strengthen oversight of management. They understand the firearms business and the responsibility of a public company director to drive value for all shareholders.
Beretta still maintains that it isn’t looking to take control of Ruger . . .
Our independent nominees will serve all Ruger shareholders – not Beretta Holding. We are NOT seeking control.
As Ruger’s largest shareholder, our interests are aligned with yours – if we succeed you succeed. That is what we are here for.
All of that said, Ruger notified its shareholders yesterday that Beretta has made an all-cash tender offer to acquire an additional 20.5% of outstanding shares, which would bring its total ownership stake to 30% of the company.
Sturm, Ruger & Company, Inc. (NYSE-RGR) (“Ruger” or the “Company”) today confirmed that its Board of Directors (the “Board”) has received a letter from Beretta Holding S.A. (“Beretta”), in which Beretta proposes, subject to certain conditions, to commence a partial tender offer for up to 20.05% of the outstanding shares of the Company, which if successful would effectively increase Beretta’s ownership stake in Ruger to approximately 30%. Such proposed partial tender offer has not actually commenced.
Shareholders do not need to take any action at this time. The Board, in consultation with its financial and legal advisors, will assess Beretta’s letter and respond in due course.
Ruger has created its own web site defending its management, performance and strategy here.
More to come. Don’t touch that dial.