Odds of Northrop Grumman selling off Ammunition business?


There were rumors of NGC selling off the ammo business a couple of years ago, which started just after the OATK acquisition, due to the differences in the core business. The loss of Lake City makes this more possible. Ammo & Weapons are now +/-$2-3B of a $30B company.

This chart is pre-OATK acquisition, but gives you a gist. From personal experience, I can see their RISK tolerance for things that go boom is low.


  1. What % possibility of this happening is this in your mind?
  2. Who would be likely candidates? After BAE, Expal and ??? I don’t think Nammo or Rheinmetall would be interested in old technology production.

All input is welcome.



EOD - I thought Nexter and Expal/MECAR were connected. Not sure.

I forgot Thales, Diehl BGT Defence, MBDA, , OTO Melara, SAGEM - however most are so small or other political issue that it might prevent a acquisition.


I could picture the U.S. Government (under a second Trump term) buying it and contract-leasing the operation to whomever, a motley crew like Black Hills, Nosler, Sig, IMI, etc.

DK -

Wow! I can’t even imagine the legal battle to even start the conversation anywhere in the swamp of the USG buying a private company.

The USG Procurement and Engineers see small caliber and medium caliber in much different pictures that most people on this Forum. So, all those small cal guys would be considered insanity.

That does bring up American Ordnance/DZI as a potential buyer. To the USG Ordnance is closer to Medium Cal than small cal is in terms of similarities (HE, fuzing, etc). They are $4B and privately owned (one of largest in USA in certain segments), so capital might be an issues.


Jay, I think it is very difficult to answer the question unless one has insider knowledge.

OTO Melara is part of the Finmeccanica group. I assume it will be them who can take decisions then.

MBDA appears to be too specialized in their warheads and missiles. I do not see them fiddlinig with low-tech SAA.

Thales, like MBDA also seems to be to far off the SAA business when we do look at their core business.
Same for SAGEM.

Diehl gave up SAA longer ago, I would be surprised to see them re-entering the business.

You may keep in mind that right now RUAG is being dissolved and DAG and MFS will be available too. Means potential buyers have a choice. So a company like Rheinmetall could do better with DAG for example.
Just that any business in the US will provide access to the US military. Here it depends on who from abroad may be interested in such a proxy. Then again almost everybody is in the pool!
And “proxy” in two ways, not only for the above but also for companies from Europe who may be looking for a legal way to circumvent EU export control (I think there is) which is strangulating lots of the business. And looking at the German govt. (if it can be called like that) here the situ is even worse as for export prevention.

What about CBC?

And I am sure there is more players, probably even from the US.

Just my thoughts as anything I said may be totally incorrect… (as usual)

Not been paying attention - could you do a quick easy recap of what’s happening to RUAG (and DAG)?


Ole, RUAG is being reformed right now as the Swiss govt. wants to get out of any export business.
If I got it right the core company shall supply the Swiss military only. The rest will be sold.

I think this is a point to start from:

Alex - Thanks!

I don’t know about insider knowledge, just a working knowledge of the the various key aspects of the market. I know a lot more than I feel comfortable sharing or am even allowed to share (NDA’s).

The conversation so far has been EXTREMELY informative. It validated some of my assumptions, changed my thoughts on some elements and introduced new information (Ruag).

Let me ask one more question:
Based upon the change to NGC’s website on ammo what assumptions does someone make?

  1. Used to have numerous specific spec sheets for 5.56 to 30mm
  2. Used to have multiple pages for Small and Medium cal and guns
  3. Basically $3B summarized in 1 page.



Jay, I am not sure if my lousy English is getting it all. In case it did:

You mean what it looks like now that the Northrop-Grumman website has dropped all the SAA + medium cal.?
If this is the question:
I was interested in aircrafts for many years and to me it looks like they are getting back to the roots. Letting all the tiny side stuff go which is only fracturing abilities, capacities and multiplies the markets to watch and deal with.
I am no manager or any such expert but to me it looks like a good decision. If I got the translation of the German saying right this shall be the English version: Cobbler, stick to your last!

The only reason I say government buyer is because I can’t imagine any private interest buying the operation for any price that would make sense to the seller. Hornady just expanded, Freedom Group has no capital, Winchester is just now taking over Lake City anyway, and the foreign brands have no major capital for something like this right now either. Lenders aren’t exactly bullish on there not being additional hurdles to the sales & production of ammo either, in terms of laws on lead, and political attacks on the 2nd amendment. Government buys a huge amount of ammo from Federal too.

DK - Ok.

I will “double down” on Small Cal guys not even being in same planet on Medium Caliber. High Explosive pressing and Fuze utilization/management/assembly is way out of scope for Hornady, Freedom, Black Hills, Nosler, & Sig. Win and IMI - maybe. Not to mention revenue. Last check -
Hornady $60-80M
Black Hills - $20-30M
Nosler - $15-25M
Sig - $228M, but part of a $30B group
Win $6B - but ammo Under $1B

In thinking about it, some of the Larger Explosives OR Defense Contracts guys would be a much better fit than the small cal guys. In general, they are much bigger and know how to do the hard work
Ensign Bickford - $300-500M - already press explosives and work with fuzes
L3 - $12B - may press explosives and DO work with fuzes
Kaman- $2B Fuzes
Pacific Scientific - $200M


Private businesses exist to make money, not necessarily provide every good or service for which there may be a market. There must be both a market demand AND the potential for profits. And, they need to consider profits left after exposure to various risks, including liability lawsuits by suit happy anti-gun groups.

If there is a demand, but no chance for profit, companies simply will not enter that market, or leave it. They can probably use their workforce and capital investments for other goods or services and make a bigger profit. If no private company wants to bid on government small arms ammo contracts, private companies don’t care who might get the contract, or if no one bids.

Government procurement contracts are a daunting maze of sometimes conflicting requirements, reports, oversight, “hurry up and wait”, fickle inspectors, and subject to be reduced or cut at any time. That, of course makes bidders likely to bid higher to cover the added costs and risks. At some point it is just more hassle than the potential profit.

At that point, if the government wants ammunition, and no one wants to bid, we may get back into government owned and operated plants, or govt owned and contractor operated.

Companies may find that research and development contracts or new product lines are more profitable than boring old small arms ammo.

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Been saying exactly this for years! The young people of today just don’t understand the way business is run. They think companies make double digit profits every year. They need to try and start a business of their own if they think it’s so easy.

John & Tom:

Great points. See link below on profitability in small caliber ammunition business.


I’m not sure how we got down this bunny trail. As far as I know, the Northrop medium caliber business is profitable. I believe their current situation is better described as Northrop purchased Orbital ATK for the Orbital part of the business. Now they realize that the rest of the business is different from medium cal and Weapon systems. Their current path does not seem to favor this segment - right now.

I agree that a majority of our population has no concept of the reality of how business works. They want an new iphone every year and they also want Bernie Sanders free everything. You can’t have you cake and eat it too.

At one point in time we practiced ‘Open Book Management.’ The standard first question to ask your entire workforce is "How much money does the company keep for every 1 in Sales/Revenue." They typical answer is 50%. They are shocked to learn 'winning' is keeping .10, and not losing is $.01.


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Thanks Jay!
That link was very interesting!