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.