Cerberus Selling Stake In Firearms After Newtown
NEW YORK (AP) -- The private equity firm Cerberus will sell the firearms company that produced one of the weapons believed to have been used in the shootings at an elementary school in Newtown, Conn., calling it a "watershed event" in the national debate on gun control.
Cerberus said Tuesday that it would sell its stake in the Freedom Group, which stood at 95 percent as of a 2011 regulatory filing. Freedom Group owns the Bushmaster rifle brand, as well as Remington and other gun makes.
On Friday, 20 children were killed, 26 people in all, at Sandy Hook Elementary School in one of the worst mass shootings in U.S history. The gunman, Adam Lanza, is believed to have used a .223-caliber Bushmaster AR-15 rifle in the attack.
The AR-15 is a civilian version of the military's M-16. Versions of the AR-15 were outlawed in the U.S. under the 1994 assault weapons ban. That law expired in 2004, and Congress failed to renew it under immense pressure from the gun lobby.
Cerberus, however, is distancing itself.
"We are investors, not statesmen or policy makers," the company said in a statement. "Our role is 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. It is not our role to take positions, or attempt to shape or influence the gun control policy debate. That is the job of our federal and state legislators."
Elsewhere, Dick's Sporting Goods Inc. said in a statement that it suspended the sale of modern sporting rifles in all of its stores. The company also removed all guns from sale and display at its store closest to Newtown.
And it appeared investors as a whole were ridding themselves of shares in firearms makers this week.
Shares of Sturm, Ruger & Co. dropped more than 5 percent to $41.55 in morning trading Tuesday. Shares of Smith & Wesson Holding Corp. fell more than 9 percent to $7.86.
Cerberus said Tuesday that it was deeply saddened by the shooting, and that it will hire a financial adviser to help with the process of selling its interests in Freedom Group, a major firearms manufacturer which, in addition to Bushmaster, produces Remington Arms.
A representative for Freedom Group could not be immediately reached for comment.
The announcement comes one day after the California State Teachers Retirement System, a large pension fund, told The Wall Street Journal that it was reviewing its $500 million investment commitment to Cerberus because of the firm's stake in Freedom Group.
A representative for the California State Teachers Retirement System could not be immediately reached for comment on Tuesday.
Cerberus affiliates made an investment in Freedom Group in 2006. The New York firm said that Freedom Group does not sell weapons or ammunition directly to consumers, and that it does not believe that "Freedom Group or any single company or individual can prevent senseless violence or the illegal use or procurement of firearms and ammunition."
Cerberus Capital Management makes investments on behalf of clients that include the pension plans of firemen, teachers, policemen, and other municipal workers and unions, endowments and other institutions and individuals.
Money made from the Freedom Group sale will be returned to its investors, Cerberus said.