German hobby hunters buy SIG arms unit By Nieck Ammerlaan ZURICH, Oct 4 (Reuters) - Two German hobby hunters are buying most of the small arms and rifles business of Swiss industrial group SIG Holding AG, SIG said on Wednesday, announcing the sale as part of a sharper strategic focus. SIG said it had concluded the long-awaited sale to Michael Lueke and Thomas Ortmeier, north German textile entrepreneurs. Both sides agreed not to disclose the selling price of the pistols, hunting rifles and barrel manufacturing units, but SIG Chief Executive Roman Boutellier told a news conference the deal would entail a book loss of less than 200 million Swiss francs. Lueke, an enthusiastic of SIG's Blaser rifles, told Reuters he had heard Blaser was for sale and became interested in the bulk of the arms units after contacting SIG's advisers KPMG. The takeover would be financed through a mix of private funds and bank credits, said Lueke, who with Ortmeier runs the 150 million mark TWE industrial textiles group. The deal, which involves the loss of 100 jobs while 700 are safeguarded, needs the approval of the monopolies commission. Boutellier expected the extraordinary deficit from the sale of the loss-making arms division to be covered by one-off income from the planned sale of Positec positioning technology business, which is to be completed before the end of the year. Trade in shares in SIG, which is increasingly focusing on packaging technology, was halted. SIG had closed at 1,095 francs on Tuesday for a year to date gain of 15 percent. The SPI Machinery index .SMAC) has gained 24 percent so far this year. Analyst Thomas Della Casa at Deutsche Bank forecast a ``very, very positive market reaction'' on Thursday. ``Many people did not buy the share because of the arms division.'' He said the stock was favourably valued. SIG has a market capitalisation of of 1.4 billion francs. This compares with annual sales of about two billion francs. BIG INDUSTRY NAMES WERE NOT INTERESTED The sale to the wealthy private investors came after SIG had been spurned by industry leaders, who had been reluctant to raise their exposure to the U.S. market which has been marked by increasing litigation over incidents involving firearms. Uncertainty over the outcome of the November elections and the new president's attitude to gun control was also a factor. Boutellier, who did not name the companies SIG had talked to, said overcapacity also characterised the market, but forecast a return to operating profit at SIG Arms in 2001. The SIG arms division makes firearms for law enforcement, military and special units as well as hunting and target arms. It includes leading international makes such as Mauser and Sauer and had an operating loss of two million francs on sales of 70 million francs in the first half of 2000. SIG Arms has been shifting to civilian business from the military market as defence spending has dropped with the end of the Cold War. The division suffered a blow last year from the expiry of its assault rifle contract from the Swiss army. The sale to Lueke & Co omits the assault rifle business, for which SIG hopes to find a buyer in the next few months. Swiss state-controlled arms and munitions group RUAG Suisse, which dropped out of the race for the whole arms division because it saw no synergies with the sports and hunting files businesses, was a potential buyer, Boutellier said. Lueke did not rule out an eventual purchase. SIG has been transforming itself from a diversified company built around machinery and engineering businesses into a global group focused on packaging technology with more than 7,000 employees. As the final step into its re-positioning, it wants to sell Positec, which makes electrical motors and automation soft- and hardware for the textile, packaging and printing industries. Applications for Positec products include assembly lines, ink dosage and the precise positioning of printing plates. Positec had first-half 2000 sales of 94 million francs and operating profit of eight million with 828 employees. Cybershooters website: http://www.cybershooters.org List admin: [EMAIL PROTECTED] ___________________________________________________________ T O P I C A The Email You Want. http://www.topica.com/t/16 Newsletters, Tips and Discussions on Your Favorite Topics
