(Adds details on separation; Updates share movement)
Nov 13 (Reuters) - American Outdoor Brands Corp said on Thursday it would split into two publicly traded companies, separating its popular Smith & Wesson firearms unit from its outdoor products and accessories business.
U.S. gun makers American Outdoor and Strum Ruger & Company Inc have been under pressure as retailers take steps to limit firearms sales following mass shootings in the country that has sparked a nationwide debate on gun control laws.
American Outdoor Brands changed its name from Smith & Wesson in 2017 and has been acquiring smaller outdoor product brands to reduce its dependence on the sale of firearms, its biggest revenue generator.
Earlier this year, smaller rival Vista Outdoor Inc sold its Savage Arms and Stevens firearms brands for $170 million.
"There have been significant changes in the political climate as well as the economic, investing, and insurance markets since we embarked upon what we believe have been our very successful diversification efforts," Chairman Barry Monheit said in a statement.
After the separation, the firearms business would be under Smith & Wesson Brands Inc and the outdoor products and accessories business under American Outdoor Brands Corp.
The spin-off of outdoor and accessories business would be tax-free to its shareholders and is expected to be completed in the second half of next year, the company said.
The stockholders of American Outdoor Brands will own 100% of each company and will be able to decide on their investments after the separation, Monheit said.
Smith & Wesson Brands will be led by Mark Smith, president of the company's manufacturing services unit. The new company is expected to generate revenue in the range of $450 million to $500 million in the first 12 months after the spin-off.
The firearms unit reported annual sales of $478.5 million in the last fiscal year, while the outdoor products and accessories business recorded sales of $159.8 million.
Cowen is the financial adviser to American Outdoor and Greenberg Traurig LLP its legal counsel, while Ernst & Young is the accounting and tax adviser.
Shares of American Outdoor, which have lost about 39% of its value so far this year, were up 1% after the bell. (Reporting by Soundarya J in Bengaluru; Editing by Arun Koyyur)