“U.S. private equity firm Cerberus Capital Management said on Tuesday it will immediately begin selling its investment in gunmaker Freedom Group in light of last week’s school shooting in Connecticut,” reuters.com reports. It’s a counter-intuitive move; firearms sales are soaring like never before, in the face of a possible assault weapons ban. Then again, they do own Bushmaster, the brand Adam Lanza used in the Sandy Hook Elementary School massacre. “Pressure mounted on Cerberus as the California State Teachers’ Retirement System (CalSTRS) said on Monday it was reviewing its investment with the private equity firm after the Connecticut school shooting.” What’s the price of political correctness these days? “CalSTRS had invested . . .
$751.4 million with Cerberus by the end of March 2012, according to its website.” I’m sure there are other Cerberus investors who got cold feet from their firearms arm. Not to mention the fact that Steven Feinberg mixes with people who view guns as anthrax incarnate.
Question: who the hell will buy it?
The Freedom Group—a combination of top shelf firearms and ammunition brands that suffered from severe quality problems after managers inflicted “efficiencies”on its various parts—has been struggling since it’s inception. It’s gone through numerous CEOs, including Bob Nardelli, the man who drove Chrysler into the ditch (and sucked-up billions in taxpayers’ bailout bucks).
Chance are the Freedom Group will be sold off piecemeal. With so many great brands in its portfolio, they will find willing buyers.
Freedom Group includes:
- Remington
- Bushmaster
- Marlin
- H&R 1871
- Dakota Arms
- Tapco
- DPMS/Panther
- Parker
- Barnes Bullets
- Advanced Armaments (AAC)
- Para USA
…and their most recent acquisition, Tapco.
Might be a good thing to get these companies divested.
I don’ t see this as a bad thing. Hopefully Marlin quality will be back. This also seems like a colossal self-inflicted wound, buy high sell low.
I need to win lottery. I want to buy a company.
Me too!
Maybe we can both win and by more than one company and hire Robert Farago to run it for us!!!
I’d make a really lousy CEO.
Trust me RF you would not be any worse than Bob Nardelli!
🙂
Robert,
You’d make for a solid leader dealing with people from within and without the business. Someone else can be the executive in charge on a daily basis running the business side of things.
Hopefully once the various sub-units are independent again, they’ll be able to un-f*** the Q&A.
Cerberus is in the business of buying distressed assets, rehabilitating them and selling for a profit. Short term they may get a premium for Freedom Group because of current demand. But down the road, the risk of an “assault weapons” ban and possible cutbacks in military spending, it doesn’t look so good.
Looking at the bigger picture they have big investors that may not like their choice of investments and pull back from investing with Cerberus. That’s bad for business and that’s whats driving this. Not to mention there will be lawsuits.
The owner of Cerberus is a gun guy and that’s really why they got interested in the first place. Not that there wasn’t a profit potential but this was a high risk venture for a group like them and small potatoes in the grand scheme.
Groups like Cerberus don’t cave to investers within a couple days. This isn’t about the investments of the failing CA retirement fund, this is Cerberus seeing an AWB on the near horizon. They wouldn’t kill the golden goose unless they knew full well their profits were about to tank.
Any of you naysayers out there still think an AWB isn’t imminent? Here’s your sign…
Totally agree brother. This tactic can dry up sources of capital for the industry. Or increase the cost of capital. And all business needs an almost constant flow and access to capital to keep the lights on. That can put gun companies out of business. This is not a good sign.
Think Chinese….
Why would an assault weapons ban effect them at all? Are we to believe that if there is a ban, the demand for the their remaining products will go down? It seems to me that gun owners will buy whatever the industry can offer, within reason.
Time to buy a crate of SKS’s. Their value should just about double after an AWB takes effect.
I don’t think so.
Cerberus has about $20B under management. CalSTRs has a bit under $1B with Cerberus. If CalSTRs (and other public pension funds) pulled their money from Cerberus, it would really hit them upside the head.
Foreign multinationals will be laughing all the way to the bank when they pick up all these companies for pennies on the dollar….
don’t forget Nardelli screwed up Home Depot and pocketd $210M to leave
http://articles.marketwatch.com/2007-01-03/news/30766741_1_chief-executive-robert-nardelli-vice-chairman-frank-blake-ceo-nardelli
Let’s hope Bloomberg doesn’t buy the whole kit just to close them all.
As wealthy as Bloomberg is he could buy out Freedom. If he did he would have to keep it open because if he shut it down he would be out most of his fortune. Besides the prick is so greedy that once he bought he would turn into a gun salesman.
Who cares? If all of freedom group went away tomorrow it would just mean more business for the remaining companies.
I like that idea, tell Bloomberg to put his money where his mouth is. He can buy these evil gun companies and then close them all up, think of all the illegal guns it will get off his beloved NYC streets.
Wonder how much money CalSTRS has invested in predator drone manufacturers?
If Fiat bought Chrysler then does this mean Beretta will by some or all of the Freedom Group? Actually that may not be a bad idea. Beretta would definitely improve the product.
fiat was given a minority stake in chrysler , the actual owner coming out of bankruptcy was the UAW VEBA. with the govt keeping a chunk of the stock too. fiat’s stake in chrysler cost them nothing out of pocket.
I believe that FIAT has been allowed to purchase a majority share because they brought in the “fuel efficient” FIAT 500.
The post was supposed be tongue in cheek. I guess some people are way to serious to get it.
i work in the industry and a lot of people were hurt by it. they were able to buy 5% increments of stock in order to upgrade their initial position to a majority stake when they met certain “milestones. “
I haven’t heard one word from the grabbers about closing up the criminal safe loophole. Maybe I missed it, Randy
Spineless cowards. Stand up, fight this bull crap. No one from the freedom group pulled the trigger. They have zero liability.
Fingers crossed my beloved Marlin is sold to someone responsible and competent.
Wouldn’t Marlin be sold alongside Remington since the Marlin factory is closed and everything of theirs is made in Ilion anyways?
Absolutely, along with H&R. Hopefully the same folks would be addressing the decline in Remington’s once great reputation as well.
The first bit of good news on the firearm front in days.
Bull! Cerberus is selling Freedom Group simply because this conglomerate of financially anemic gun-related companies has been, ‘up to its eyeballs in rats’, and ‘bleeding money’ for the past 5 or 6 years – No other reason!
I’ve been watching the financials coming out FG for years, and agree with you.
The first sign I saw that Cerberus didn’t know their ass from a hot rock about running a firearms company was that they but Bob Nardelli in charge of the group. When I saw that, I knew that FG’s days were numbered back then. Nardelli is now gone, but the damage that fools from the Harvard Business School like Nardelli do lasts a long time…
Maybe gun-buyers just realized that FG gun quality dropped? Letting FG go after a mass shooting says ” we’re selling to avoid bad press, not because we wrecked quality control.”
^
This.
Fnh should buy it.
So what company that actually does have quality control would be right to buy Marlin, H&R and Bushmaster from Remington? Windham Weaponry?
Windham buying Bushmaster back would be hilarious.
I don’t think that Windham would bother at this point. Why bother taking on a PR liability when no one in the press connects Windham to Bushmaster?
no matter what the laws, emotional jurys in civil proceedings will bankrupt everyone with any interest in bushmaster. they may ever take cerberus down .
think asbestos and tobacco on steroids.
Can’t sue firearms makers for liability unless their product causes harm through design or material failures. The company is protected from lawsuits for criminal use. Republicans passed that law in 2005.
We could take up a collection and buy one of the companies. I vote to buy Marlin.
This is good news for the civilian market, since TFG was clearly focused on the military market and let the quality of traditional firearms swirl down the porcelain convenience.
Remington conspired with its friends at the DoD to screw Colt. When that failed, Remmy’s fate was sealed.
http://militarytimes.com/blogs/gearscout/2012/08/17/gao-upholds-colts-protest-of-remington-m4-contract-award/
http://militarytimes.com/blogs/gearscout/2012/10/01/m4-contract-protest-update-the-army-is-going-to-solicit-new-bids/
Two months ago, the Army decided to fold its corrupt hand and rebid the contract fairly. Now Cerberus is getting out of the gun business. If anyone thinks that’s a coincidence, I have a bridge I’d like to sell him.
Ralph,
Excellent insights and observations as usual. Now, if you will kindly post your cornbread stuffing with sage recipe it will reach perfection.
Ralph, should an AWB or other similar draconian legislation be passed, the only possible way to assuage the hurt will be if you finally post that recipe. Whaddya say?
Come-on Ralph, be a good gun-brother and say yes to Matt in Florida’s question.
This is fascinating.
Maybe some of the former employees of these firms (with exception of those who work at Windham Weaponry) will have a chance to pool their money and buy their old companies back.
I can’t think of a single thing that Cerberus has done better than what all those companies did on their own. All Cerberus did was mess things up.
Cerberus , the guardian of the gates of hell. They choose a name like that and run when things get tough for them. Cowards. Yes it was a tragedy however the best way to prevent it would be to arm the people so they can fight back. Not run and hide like a scalded dog. (pun not intended but it fits nicely)