Ammo Inc. plans to sell its ammunition manufacturing assets to Olin Winchester in a $75 million cash transaction, the Scottsdale-based company announced Tuesday.

Ammo (Nasdaq: POWW) on Jan. 20 entered into a definitive agreement with Olin Winchester to sell its ammunition manufacturing assets, which includes the company’s 185,000-square-foot production facility and ballistic range in Manitowoc, Wisconsin. Olin Winchester is a subsidiary of Olin Corp., a Missouri-based chemical products and ammunition manufacturer. 

Ammo expects the sale to further simplify its business while reinforcing the company’s cash position to support expansion and thoughtful capital allocation, according to a company release.

Ammo said the transaction is the “culmination of a comprehensive strategic review process” in which the company's board worked with independent financial and legal advisors to engage with prospective buyers.

“Following a thorough process supported by our independent financial and legal advisors, the board determined that a sale of Ammo’s ammunition manufacturing assets to Olin is in the best interest of the company’s stockholders and positions us for long-term success,” Christos Tsentas, board chair of Ammo’s M&A committee, said in a statement.

The transaction is expected to close in the second quarter, pending regulatory approval. The deal was unanimously approved by Ammo’s board of directors.

Ammo’s stock closed at $1.68 a share on Tuesday, up 12% on the news of the asset sale.

Upon closure of the deal, Ammo expects to rebrand with a new corporate name and will focus on growing Gunbroker.com, its online marketplace for firearms, ammunition, shooting accessories and outdoor gear.

“We believe the company has significant opportunities to grow and scale GunBroker.com as the e-commerce space for the firearms and shooting sports industries continues expanding,” Tsentas said. “We expect this sale will enable us to capitalize on these opportunities, while allowing the company to become a more focused, streamlined and profitable organization.”

Ammo will continue to operate from its Scottsdale headquarters and an unspecified number of employees at its Wisconsin factory are expected to join Olin Winchester after the deal closes, a company spokesperson told the Business Journal.  

Ammo had 374 employees as of June 10, according to the company’s annual report.

Company's financials under investigation

Ammo’s sale of its ammunition manufacturing business comes on the heels of an executive leadership change and an independent investigation into the company's financials by a third-party law firm.

Ammo in September named Paul Kasowski its chief financial officer after Rob Wiley resigned from the position earlier that month upon request of the company’s board, the Business Journal previously reported.

Wiley’s resignation as chief financial officer preceded a decision by a special committee of Ammo's board to retain a law firm, which is conducting an independent investigation to determine whether the company accurately disclosed financial transactions by executive officers and management from 2020 to 2023.

The investigation is focusing on whether Ammo properly characterized certain fees paid for investor relations and legal services as reductions of proceeds from capital raises rather than expenses in 2021 and 2022, and whether the company appropriately valued unrestricted stock awards to officers, directors, employees and others from 2020 to 2022, a regulatory filing shows.

Ammo said in the filing it plans to devote “significant effort and resources” to remediate and improve its internal control over financial reporting.

"The independent investigation is in its final stages. Furthermore, the company previously disclosed that certain historical financial statements and auditors’ reports previously filed by the company should no longer be relied upon," Ammo said in a Jan. 21 regulatory filing. "The company expects to provide investors with an update related to such financial statements in the first calendar quarter of 2025."

Ammo on Nov. 20 received notice from Nasdaq that it’s out of compliance for failing to file its financial results for the quarter ending Sept. 30, 2024. The company has until Jan. 21 to submit a plan to regain compliance with Nasdaq. If Nasdaq accepts the plan, Ammo could receive a 180-day extension to regain compliance, according to a regulatory filing.

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