After the close on Wednesday came news that Smith & Wesson has increased the purchase price to be paid in its previously announced fixed-price cash tender offer. The hike is 10%, from $10.00 per share to $11.00 per share for up to $75 million. As a result of today’s hike, the net result is that S&W is actually decreasing the maximum number of shares it is authorized to repurchase.
It was back on June 13, 2013 that Smith & Wesson’s Board of Directors approved the repurchase of up to $100 million in its own common stock. Up to $75 million worth of the stock was under a fixed-price issuer tender offer, and the remaining amount would either be handled through the open market or under negotiated transactions.
This new higher price of $11.00 per share represents a premium of approximately 18.3% to the closing price of $9.30 on June 13, 2013. The reason for the hike is that Smith & Wesson shares are now up to $10.62, so tendering the stock at $10.00 would actually be under the market. Smith & Wesson shares have traded in a 52-week range of $7.40 to $11.25 and Yahoo! Finance lists its current market cap at $683 million.
The gun business remains strong. While gun and ammunition inventories in stores remains low, most gun retailers have been restocked with at least a portion of what they used to carry. Back in December and January the frenzy was to the point that guns were scarce and ammunition was almost impossible to find.