If you combined all the companies manufacturing and selling firearms in the United States the resulting conglomerate still wouldn’t crack the Fortune 500. Firearms is a fragmented industry characterized by niche manufacturers with strong brands appealing to loyal customers. Enter Cerberus, the super-secretive investment group whose spectacular publicly-funded failure with Chrysler hasn’t taught them the wisdom of the maxim given Professor Harold Hill: “You gotta know the territory.” Reaching into its deep pockets, Cerberus created something called The Freedom Group: Remington, Bushmaster Firearms, DPMS/Panther Arms, Marlin, H&R, The Parker Gun, EOTAC, Mountain Khakis, Advanced Armament Corp., Dakota Arms and Barnes Bullets. As always, Cerberus had an exit strategy: an IPO. That was then (October 2009). This is now [via businessweek.com]. . .

Freedom Group Inc., the firearms and ammunition company controlled by Stephen Feinberg’s buyout firm, called off its plans for an initial public offering.

The Madison, North Carolina, company filed with the Securities and Exchange Commission today to withdraw the registration statement for the stock sale. According to the filing, Freedom may hold a private offering instead . . .

Freedom said in today’s filing that it “may undertake a subsequent private offering” through Rule 155c of the Securities Act of 1933. The SEC adopted this rule in March 2001 to allow companies to switch to a private offering when a public stock sale is no longer as attractive.

Meanwhile, Cerberus has closed Bushmaster’s factory and brought their marketing department “in house” to Remington. It’s a brand management decision that’s raised red flags amongst the firearms faithful.

It’s also one that reflects a corporate culture that worships the gods of synergy, rationalization and Six Sigma. Cerberus’ decision to leave former Home Depot and Chrysler CEO and firearms neophyte Bob Nardelli at the top of the Freedom Group food chain is another.

Will The Freedom Group get a fresh infusion of private capital? Which mouths will it feed first? Watch this space for your chance to buy the eventual spin-offs and management buy outs.

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19 Responses to Freedom Group Withdraws IPO

  1. Actually Professor Hill was admonished by the other salesmen for NOT knowing the territory. (I played the part of Hill in my 6th grade Elementary School class play)

    But he lives like a king
    And he dallies
    And he gathers
    And he plucks
    And he shines
    And when the man dances
    Certainly, boys
    What else?
    The piper pays him!
    Yes sir, yes sir
    Yes sir, yes sir
    When the man dances
    Certainly, boys
    What else?
    The piper pays him!
    Yessssir, Yessssir
    But he doesn’t know the territory!

  2. Cerberus’ decision to leave former Home Depot and Chrysler CEO and firearms neophyte Bob Nardelli at the top of the Freedom Group food chain is another.

    That’s the guy who was looting Home Depot. I’ll have to boycott the Freedom Group and it’s subsidiaries from now on. Glad there are so many other options 🙂

    • Holy Crap, Batman! Nardelli?! I know people that worked at Home Depot. He took a thriving company and turned it’s culture from “friendly” to something that most closely resembles that of an Iron Curtain country in the 1960s. His biggest contribution to Home Depot was to add “self-service” checkout with barcode scanners. (Really practical, when you have cart full of 2″x4″s, lemme tel ya.) Then he did the same thing to Chrysler. And this is the moron they’ve put in charge of the Freedom Group?

      I smell a hat trick coming on…

      The problem with conglomerates is that they see everything as a dollars-and-cents proposition, leaving “quality makes sense” out of the equation. Closing the Bushmaster facility is telling. If you want an analogy outside the world o’ guns, go take a look at Fender Musical Instruments. In the 70s, they were sold by Leo Fender himself to CBS Musical Instruments (a division of CBS Entertainment). Epic FAIL. The Powers-That-Be changed the design of the necks on Stratocasters so that they used three bolts instead of four, calling it a way to provide owners with “microtilt” adjustment of their necks. Trouble is, nobody adjusts their necks – they leave that to guitar technicians. And saving 25¢ on a bolt was bad economics, for the three bolt necks wouldn’t stay adjusted. As a result “Pre-CBS Fenders” now go for thousands of dollars, and “CBS-era Fenders” are considered crapalicious pieces of junk, that attract only buyers with little knowledge of Fenders. Expect to see the same out of the FreeDOOM Group if Nardelli remains at the helm.

      God save us all from the bean-counters.

      • Yeah, it’s an old story. Remember what happened to Harley Davidson when it was acquired by AMF? Hogs from that period were riddled with problems, and brand equity was almost destroyed until the business was repurchased by its management.

  3. I thought the firearm industry was a colossus, swimming in money with which to brainwash the easily led masses. You mean to tell me that grass roots 2nd amendment activists might actually have grass roots?

  4. It’s interesting to me that Cerberus Capital has the same first name as the three-headed dog in Greek mythology that guarded the gate to Hades.

  5. I’m sure the fact that Nardelli is running things has absolutely nothing to do with the fact that the IPO didn’t get off the ground. No. Nothing.

  6. The involvement of Cerberus has been a death-knell for some once-respected American icons of industry. Since Cerberus took the helm, for instance, the Freedom Group has had to publish a sizable and almost-permanent spread of recall notices and safety warnings in the back pages of the American Rifleman. This month’s embarrassments include a recall of Bushmaster ACR rifles, Remington shotguns, and .22 Hornet ammunition.

    I’m saying all this as a longtime owner and fan of these gunmakers, not as a hater. I’ve owned many Marlin, Remington and H&R firearms over the years; hell, I still own several and I’m actively looking to buy several more! I sincerely hope Cerberus doesn’t run them into the ditch, because twenty years from now I want my grandchildren to learn to shoot with the same guns I learned to shoot.

    • Obey the old adage of “Follow the Money”. Who controls Cerberus? Old Mr. Control Everything, George Soros. Follow the link to Sipsey Street Irregulars and then elsewhere.

      http://sipseystreetirregulars.blogspot.com/2011/04/soros-buying-firearms-ammunition-and.html

      Beware the ex-Nazi, Hungarian money man. He is out to control everything, including food and guns. He will work hard to manipulate a shortage of ammunition so we can’t fight back as effectively as we would need to do. He will also work hard to manipulate the food supply to control as many people as he can. Remember the Boy Scout motto, “Be Prepared”. I am, are you?

      • Well, Soros is far from an ex-Nazi. He’s actually a refugee from the Nazis, but that doesn’t mean he’s not a scumbag of the lowest order. He’s called “The Man Who Broke the Bank of England.” He’s a vicious currency speculator who lives to make billions from the misery he causes. He funds “Move On” and a lot of other lefty causes. He’s violently anti-gun and has a great deal of power among a lot of Democrats, who he funds liberally. Turn over a rock and you’ll find George Soros.

        • No way. Soros is Jewish, although he’s completely secular. His parent were commies who raised him to speak Esparanto. He’s one of the few native Esparanto speakers left in the world.

        • Yes, as a young Jew in Hungary, Soros posed as a Christian in order to deceive the Nazis, and he used to go around with his adopted “godfather” and deliver papers to the Jews to confiscate their property.

  7. Well that makes my decision whether to buy an Armalite or DPMS SASS a lot easier. I was leaning Armalite anyway.

  8. Gunship Cowboy says: “Obey the old adage of “Follow the Money”. Who controls Cerberus? Old Mr. Control Everything, George Soros. Follow the link to Sipsey Street Irregulars and then elsewhere.

    http://sipseystreetirregulars.blogspot.com/2011/04/soros-buying-firearms-ammunition-and.html

    I followed your link and it fails to establish any connection between Cerberus and Soros. Apparently, someone was pulling your leg.

    Cerberus is controlled by Stephen Feinberg, a major GOP contributor with close ties to the Bush crowd — Rumsfeld, Quayle, Snow, et al are officers and lobbyists for Cerberus. While Feinberg is wealthy by mortal standards ($1+B) he’s a bottom feeder in Soros’ world.

    Cerberus has gained a reputation as a sort of glorified strip and flip operation. Chrysler is by far Feinberg’s largest play to date and it failed big time. Same old story: These corporate raiders can come in and sex up the balance sheets, but they can’t make the companies operate better. What do they know about cars — or firearms?

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  11. Some great posts, even thought many, if not most, have missed an obvious observation regarding the withdrawal of the IPO. That being, another factor that should at the very leased be considered – the timing of the CNBC, Remington Under Fire expose’ – which demonstrated that Remington is potentially a toxic asset to the rest of FG collection of companies. The defects in the M/700 product line X (times) 5,000,000 (5 million) units in the field = Net loss of what? What would it cost to recall, and retrofit each unit with a safer alternative fire control if Remington were forced to recall these rifles, you do the math? Certainly all of the members of these collective companies know there is a National Class Action in place to answer the question of weather the M/700 is defective, an/or, if certified, would force Remington to recall. Could this public offer have been created to insulate the financial capitol of those presently holding the bag for these liabilities, to pawn it off on the public? We may never know the true answer to this question now, but it is a
    certainly good theory! It might have even worked, had CNBC not aired this piece…

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