Cerberus Capital Management, which helped created one the nation's largest gun manufacturing conglomerates, has announced it is selling off its investment in the group in response to the Sandy Hook Elementary shooting. The firm announced this morning that it will divest itself of Freedom Group, which was had been a fairly successful enterprise for the firm, but has become too controversial in the wake of yet another mass shooting and a renewed focus on gun control. Freedom Group includes Bushmaster, which manufactures the rifle that was used by the Newtown shooter to kill 20 school children on Friday.
Cerberus is a private equity company that creates and manages investments on behalf on pension funds and other large institutional investors. They created Freedom Group in 2007, after buying several smaller gun companies and merging them into one firm. In the first nine months, of 2012, they had net sales of $677 million, a 20 percent rise over the year before, according Dealbook. The company had attempted an IPO of Freedom Group in 2011, but withdrew plans after a significant dip in gun sales. (This 2011 story in The New York Times provides more background on the company and its origins.)
In a statement the company said "that this decision allows us to meet our obligations to the investors whose interests we are entrusted to protect without being drawn into the national debate." One of their largest clients, the California State Teachers’ Retirement System, issued a statement on Monday suggesting they might withdraw their funds from Cerberus after Friday's tragedy, a move that likely spurred the investment giant to act. Former New York governor Eliot Spitzer also wrote an opinion piece for Slate, arguing for increased economic pressure on Cerberus and other companies who invest in gun manufacturing as a way to curb the spread of guns. Fortune magazine suspects they will be unlikely to find an American buyer for the firm, and will have to sell to a foreign gun company, perhaps a rate far below their true market value.
Update: Another, probably coincidental, but interesting bit of trivia: The father Cerberus's CEO lives in Newtown, CT.
This article is from the archive of our partner The Wire.
We want to hear what you think about this article. Submit a letter to the editor or write to firstname.lastname@example.org.