Opening day at SHOT Show always brings unexpected news. This year, the surprise was the quiet announcement that the Olin Winchester subsidiary of Olin Corporation (NYSE: OLN) was paying $75 million dollars for Ammo, Inc.’s (NASDAQ: POWW) ammunition business.

Not only was the announcement news to the industry, it was a total blindside to AMMO’s booth workers. For them, it was unexpected news accompanied by an injection of uncertainty that didn’t do much for their enthusiasm. “We had absolutely no idea,” one worker told me, “someone told me earlier there was ‘something’ going on, but we had no idea. Guess we weren’t paying attention.”

Wall Street, however, was watching, and apparently approved.

Following Tuesday’s market close, Ammo (POWW) stock had climbed to $1.68/share, the highest close since July 2024. At the market close yesterday, it closed at $1.63, still significantly higher than before the announcement.

Despite the surprise announcement of a sale of the ammunition business of Ammo, Inc., the company is still offering its products at SHOT. The plan is to continue business as usual until a sale is concluded. OWDN image.

The transaction was unanimously approved by AMMO’s Board of Directors and ends a year-long strategic review process board member Christos Tsentas says concluded the sale was “in the best interests of the company’s shareholders” and “positioned them for long-term success.”

Sale of the ammunition section of AMMO leaves the company with GunBroker.com, a significantly better performing business. It also leaves the company with a significant amount of capital. Capital the company says will be used to “grow and scale GunBroker.com as the e-commerce space for the firearms and shooting sports industries.”

What, I asked CEO Jarrod Smith, drove the decision?

“At some point running an ammo company,” he explained, “you’ve got to decide to get real big or stay niche. And in hard markets like this, there are supply chain risks at every turn. There’s a massive shortage of propellant, you have to buy all your primers for manufacturing, etc.”

“We didn’t have the best outlook at our size market without being connected at the hip to a strategic manufacturer that was more vertically integrated…What it came down to was that the team that’s in Manitowoc, with their deep skill set,to be used at maximum capacity, we would need to invest in a primer line, a propellant line, and bullet manufacturing. That was going to be another 10, 15, 20 year push into the energetics world to secure our future, or we needed to streamline our business.”

“And,” he concluded, “that’s what we’re doing.”

Upside? Absolutely. In addition to a significant cash influx (approximately $60 million after expenses and retirement of the construction loans for the Manitowoc facility) the management team can now focus their attention on growing their already-successful GunBroker.com business.

For Olin, the transaction brings several additional capacities. The 185,000 square foot Manitowoc facility -and its employees - will, according to Olin, “complement Winchester’s existing production capabilities.” It will also enable manufacture niche products that offer the ability make “high-margin speciality calibers” without requiring line changeovers or capacity reductions at their other facilities.

When fully integrated, Olin estimates the acquisition will yield “realized synergies” of $40 million.

The Manitowoc facility,” Winchester Ammunition President Brett Flaugher says, “will extend Winchester’s leadership position and expand the reach and value of our near full integration.”

That, he says, “will enable our legacy plants to lower costs of existing high-volume products and increase our ability to participate in higher margin specialty rounds at a cost advantage.”

The closing is expected to be completed in Q2 of 2025. At the same time, AMMO will be rebranding and changing the corporate name.

In addition, Smith says, they’re focusing on processes designed to make it easier for GunBroker.com buyers and sellers to more easily offer -and purchase- their products online. “We’ve accomplished a lot,” he said, “we have built a cart that enables buyers to check out multiple items, added a financing facility, and shipping solutions to offer lower rates.”

Future goals include changes Smith says are designed to make the site “the agnostic glue of the industry for the exchange of firearms and regulated items.”

Part of that construction includes a mobile app that will allow sellers to streamline the process of putting product in front of potential buyers.

As always, we’ll keep you posted.

—Jim Shepherd