On Tuesday, private equity firm Cerberus Capital Management announced that in response to the shootings at Sandy Hook Elementary School in Newtown, Conn., it intends to divest itself from its ownership of gunmaker Freedom Group.
Freedom Group, which owns such gun brands as Remington Arms and Bushmaster Firearms (maker of the AR-15 rifle reportedly used in the Sandy Hook shootings), was originally slated for initial public offering back in October 2009. However, a cooling in the IPO market and a slowdown in gun sales in 2010 caused Cerberus to postpone the going-public.
Cerberus took pains to make clear that Freedom Group did nothing wrong in connection with the tragedy in Connecticut, noting that "sales are made only to federally licensed firearms dealers and distributors in accordance with applicable laws and regulations." Nonetheless, calling Sandy Hook "a watershed event that has raised the national debate on gun control to an unprecedented level," the company has decided to begin "a formal process ... to sell our interests in Freedom Group, and we will then return that capital to our investors."
Cerberus said its job is not to make policy but to "make investments on behalf of our clients who are comprised of the pension plans of firemen, teachers, policemen and other municipal workers and unions, endowments, and other institutions and individuals." Selling Freedom Group "allows us to meet our obligations to the investors whose interests we are entrusted to protect without being drawn into the national debate that is more properly pursued by those with the formal charter and public responsibility to do so," stated the company.
Elsewhere in the markets, other gunmakers continue to struggle with the Sandy Hook fallout. Shares of Smith & Wesson (NASDAQ:AOBC) are down another 9.2% today, and shares of Sturm, Ruger (NYSE:RGR) are falling 5.6%. Dick's Sporting Goods (NYSE:DKS) has suspended sales of modern sporting rifles in response to the Connecticut shooting.