Arlington-based government contractor Alliant Techsystems announced a $985 million cash deal Thursday to purchase sporting-goods company Bushnell Outdoor Products.

The deal for Kansas-based Bushnell allows ATK to focus more of its business on the growing sporting-goods market rather than the lagging defense industry, which has been the target of cutbacks by the Obama administration. Bushnell, a 65-year-old company, makes binoculars, rifle sights and night-vision tools used by hunters and fishers.

ATK relocated its headquarters to Arlington from Minneapolis in 2011 and is best known for producing ammunition and rockets for the government. The $3 billion publicly held company also developed some of the space-flight hardware used by the Mars rover Curiosity that landed last year. It had 530 local employees as of late last year.

More recently, ATK has offset declines in its defense sales with growth in its consumer-focused sporting group, which sells ammunition and shooting accessories such as holsters and scopes. Earlier this year, the company bought Caliber, the parent of Savage Sports, which makes hunting rifles and shotguns, for $315 million.

In its most recent quarter, ATK said profit in its defense group dropped 32 percent as profit in its sporting group rose more than 112 percent. The sporting unit’s sales in that quarter outpaced ATK’s aerospace group, which makes satellites components and aircraft parts for the military. The defense group remains ATK’s largest business unit.

Government contractors have been trying to rapidly diversify into other areas as federal spending shrinks. McLean-based Science Applications International Corp. has picked up health-technology companies, while BAE Systems, which has its U.S. headquarters in Arlington, has been translating its experience in naval ship repair to commercial shipbuilding.

“ATK, in its aerospace and its defense products groups, has seen a pretty good reduction in sales in the last two years,” said Rick Whittington, an analyst at Drexel Hamilton. “I certainly understand the desire to balance out and take advantage of this adjacency.”

In a call with analysts Thursday, ATK’s chief executive Mark DeYoung said the company isn’t giving up on government work.

“But at the same time, we’re mindful of the growth opportunities in the market; we’re mindful of shifts in the market,” he said. “I think it’s a natural decision for us to move in the direction of where the opportunity resides.”

Bushnell is owned by MidOcean Partners, a Manhattan-based private-equity firm. The firm has owned Bushnell since 2007, when it acquired it from another private-equity firm.

The deal comes as gun manufacturers have been thrust into the spotlight by the death of 20 first-graders and six adults at the Sandy Hook Elementary School in Newtown, Conn., in December.

The Teachers’ Retirement System of the City of New York and New York City Employees’ Retirement System sold shares in ATK after the Newtown massacre, according to Reuters.

ATK’s stock rose about 1 percent, to $98 a share, Thursday.

Cravath, Swaine & Moore represented ATK in the deal. Bushnell was represented by Kirkland & Ellis.