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FGI CEO Calls GDSI Announcement of Intent to Buy "Publicity Stunt" – But Was It?
Responding to yesterday's press release by Global Digital Solutions of their intent to offer $1.082 Bn cash for Remington Outdoor Company, Freedom Group Inc CEO George Kollitides issued an internal memo to employees calling the announcement a "publicity stunt". The memo was obtained by Grandview Outdoors and published in part on their site.
"A small, unknown investment entity publicly announced its desire to acquire the Remington Outdoor Company," the memo obtained by Grand View Outdoors says. "If this wasn't disruptive to our employees and customers, we would not acknowledge the news and recognize it for what it is: a publicity stunt from an agenda-driven group with no credible financing options."
There are a few interesting point to ponder.
First, that's a lot of cash for a relatively unknown company and their technology thrust areas aren't exactly mainstream firearms. Leaving me scratching my head last night when I initially read the press release. Corrected PR states cash and common stock.
Second, GDSI claims to have filed a Form 8-K and announced an Unsolicited Letter of Intent to Acquire Remington Outdoor Company (aka Freedom Group) for $1.082 Billion. You don't play around with the SEC. So if GDSI did file it, it means they have to mean it, or face trouble. And if they didn't file it, they may get in hot water over saying they did.
Third, the GDSI announcement went out via PRnewswire and was picked up by the main stream media. This didn't go out like an industry rumor. The GDSI CEO actually went on record about financial issues. Lying about this is something the SEC doesn't take lightly.
Finally, the sections of the internal Remington memo we have seen, never says GDSI's claim is untrue. Rather, it calls the announcement a "publicity stunt". The info that is out there wasn't released officially but leaked to a firearms centric site and not the main stream media. That's pretty interesting considering last we had heard the whole kit and caboodle was for sale and Kollitides was working with some other Remington employees to raise the cash to purchase it themselves. Maybe someone spoke too soon? Of course, sometimes filing time is filing time.
All we have to go on is what has been leaked. So far, we haven't seen any definitive statement to the public from Remington/FGI regarding the situation. This leaves serious analysts questioning the entire situation and leads me to believe someone is being less than truthful. The question is, which party?
UPDATE – PRnewswire has issued a correction of yesterday's press release at the request of GDSI.
In the news release, Global Digital Solutions Files Form 8-K, Announces Unsolicited Letter of Intent to Acquire Remington Outdoor Company, with Estimated Annual Sales of $1.25 Billion and a Purchase Price of Approximately $1.082 Billion, issued 11-Mar-2014 by Global Digital Solutions, Inc. over PR Newswire, we are advised by the company that the first paragraph, second sentence, should read "GDSI has made an unsolicited offer to purchase Freedom for $1.082 billion in cash and shares of GDSI's common stock," rather than "GDSI has made an unsolicited offer to purchase freedom for $1.082 billion in cash," as issued inadvertently."
Read the SEC filing here secfilings.nasdaq.com. Interesting. It was an unanswered, unsolicited proposal but I would have expected FGI to disavow this as an unacceptable offer at this point.
Tags: Freedom Group Inc, Global Digital Solutions Inc, Remington
This entry was posted on Wednesday, March 12th, 2014 at 18:37	and is filed under Industry. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
11 Responses to "FGI CEO Calls GDSI Announcement of Intent to Buy "Publicity Stunt" – But Was It?"
Fernando Coelho says:
Here is what CNN is reporting now:
In the news release, Global Digital Solutions Files Form 8-K, Announces Unsolicited Letter of Intent to Acquire Remington Outdoor Company, with Estimated Annual Sales of $1.25 Billion and a Purchase Price of Approximately $1.082 Billion, issued 11-Mar-2014 by Global Digital Solutions, Inc. over PR Newswire, we are advised by the company that the first paragraph, second sentence, should read "GDSI has made an unsolicited offer to purchase Freedom for $1.082 billion in cash and shares of GDSI's common stock," rather than "GDSI has made an unsolicited offer to purchase freedom for $1.082 billion in cash," as issued inadvertently. The complete, corrected release follows:
Global Digital Solutions Files Form 8-K, Announces Unsolicited Letter of Intent to Acquire Remington Outdoor Company, with Estimated Annual Sales of $1.25 Billion and a Purchase Price of Approximately $1.082 Billion
Timmay says:
Remington/FGI starts to look bad by not speaking up.
AL Chamber and Gov say Rem told us they are not in negotiations and infer it's a publicity stunt. Legalese non denial-denial?
Does GDSI break the law by offering up a price they know will be declined?
Found this, nothing new and earthshattering but a nice sumation from an outside source.
http://mobile.businessweek.com/articles/2014-03-12/cerberus-gets-a-1-billion-bid-for-americas-biggest-gun-company
Yeah, that was my thought as well. Specifically, the last paragraph where they discuss a publicity stunt about their "Gatekeeper" tech. Sounds pretty crazy to me, my guess is they're planing on leveraging their tech as being the first company with human implantable RFID to use that as a firearms safety tool. Sounds great on paper, and makes the uninitiated feel warm and fuzzy. Although then you've marked every police officer, soldier, and civilian gun owner with a trackable chip. Not to mention their board of advisers isn't exactly "pro gun". There was some other negotiations with Airtronic last year, and they were supposed to have merged by now according to the press release (actually end of 2013) more info is supposed to be in the Form 8-K which is here: http://www.sec.gov/Archives/edgar/data/1011662/000121390014001379/0001213900-14-001379-index.htm
Oops, try starting here, second one down looks like it has the 8K.
http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001011662&owner=exclude&count=40&hidefilings=0
It smelled a little fishy yesterday after looking at the company information available in regard to their financials. Obviously outside financing is possible, but it was still odd for that amount. Plus they didn't bother to mention the other companies by name that they are looking to acquire. Obviously, Remington was put aback with the announcement. If it was just a publicity stunt, then they definitely got a few people's attention.
Sal Palma says:
It looks like Global Digital Solutions is a West Palm, FL company. There stock is currently trading at $0.86 per share so it's a penny stock. I'm not sure if its trading on the pink-sheets or the major exchanges but if it stays below a $1 for long it will be moved off the exchanges and on to the pink-sheets. I couldn't find a 10K for the company but I did locate a 10Q that for 2012 and 2013 show net operating losses as well as negative cash flows. The stock is probably closely traded.
It's possible that the company was looking for a bump in their stock price from the announcement. You never know with closely traded companies.
However, based on published financial statements that I was able to locate, it is highly unlikely that Global Digital Solutions has the cash or market cap to acquire the Freedom Group. I would take George Kollitides internal memo as accurate.
It used to be on the pink sheets, don't know exactly where it is now. Try the link to their Form 8K above. Maybe you can make sense of it.
Middle Man says:
It is not beyond comprehension that a company would use an SEC filing to generate publicity. Media outlets breathlessly reporting the unsolicited bid took the bait and ginned up coverage that GDSI could *never* buy or place via and honest/ethical means.
SSD says:
They went beyond the SEC filing and issued a press release as well using the K8 filing as justification. I hope that this is dealt with lest it set a very bad precedent.
Weekly Reader says:
So what's the final answer on this? Did FGI ever release an official statement?