“After a nearly yearlong effort to sell its gun business, Cerberus Capital Management LP is close to bringing on a minority investor and lender to the weapons maker to let some of its investors sell out, a person familiar with the matter said.” As wsj.com points out, Steven A. Feinberg’s minions have been looking to punt, indeed promising to punt the Freedom Group (FG) for almost a year, after it was revealed that Newtown spree killer Adam Lanza used a Bushmaster AR-15 for his murderous spree. Spurred on by The California State Teachers Retirement System’s decision to pull some $15m out of the Freedom Group in protest. The sales process has been, shall we say, fraught. As the wsj reports . . .
Cerberus hasn’t reached an agreement with a buyer. The sales process has been complicated by several factors, including subsequent high-profile shootings and financing issues for some possible bidders, the person familiar with the matter said. Some offers were lower than what Cerberus thought was fair, the person said. In addition, some private-equity firms looked at the company but dropped out in early September, the person said.
Cerberus had originally sought around $1 billion for the business, a person familiar with the matter said. The new planned deal, including about $200 million in a credit facility, values the business at around $1.2 billion.
I’m not buying it (so to speak).
Despite a rising tide lifting all gun manufacturers (FG’s quarterly revenues rose 46 percent from last year to $347.1 million, earnings doubled to $31.2 million) the agglomeration of competitive and non-synergistic firearms-related enterprises known as the Freedom Group has managed to screw the pooch. Marlin is dead in the water. Bushmaster’s got quality control problems. AAC has lost its edge. And so on.
In short, the Freedom Group has run down the value of its brands, which have sweet FA to do with each other. They’re worth more sold separately than as a group. The real question is this: who’s the mystery minority investor? There was talk of current FG CEO George Kollitides [above] investing his personal fortune in the Group. We shall see . . .