Kahr Arms bought the 32-year-old company and is expected to maintain both of its locations, along with its 29 employees.
Firearms manufacturer Kahr Arms has bought Fridley-based gunmaker Magnum Research, Inc., for an undisclosed sum, the companies recently announced.
Advertising executive John Risdall—who's also co-owner, chairman, and acting CEO of Magnum Research—said Wednesday that the decision came after the 32-year-old company ran out of money.
The company—which had 2009 revenue of close to $20 million—specializes in producing niche firearms, including the Desert Eagle Pistol and the well-known “Tommy gun,” a submachine gun that became well known during the Prohibition era.
Within the past three years, Magnum Research tried to cut costs by bringing all of its manufacturing—some of which was performed at a contract plant in Israel—to the United States.
“We had no control over costs in Israel,” Risdall explained. “We needed to have firm contracts.” But even after bringing all manufacturing to a Magnum Research plant in Pillager, a small city near Brainerd, the company continued to experience problems.
For example, the company worked to shift from machine parts to cast parts for its firearms, but “we had some people dragging their feet,” Risdall said. “We just couldn’t find a caster that could get it done.”
Risdall also places some of the blame for the company’s downfall on Stu Utgaard—a former mergers and acquisitions broker who recently wound up buried under $31 million in personal debt. Magnum Research sent him four shipments of firearms—amounting to almost 14 percent of the company’s total assets—and Utgaard failed to pay for them, according to Risdall.
“He . . . took us to the cleaners,” said Risdall, who is best known as chairman and CEO of New Brighton-based Risdall Advertising Agency.
In December, Magnum Research hired Quazar Capital Corporation, based in Plymouth, to explore its options. The 15 shareholders of the company—which had a limited guarantee with a bank—more recently voted to sell, Risdall said.
“The bankers . . . just totally lost faith in us,” he said. “I had no choice.”
Risdall said that Kahr Arms—a subsidiary of Worcester, Massachusetts-based Saeilo Enterprises, Inc.—plans to retain the 24 employees at Magnum Research’s Pillager plant, as well as the company’s current suppliers. The Fridley headquarters, which now has five employees, will stay open at least through the end of the year, when its lease ends, Risdall said.