Friday, 21 October 2016
Last updated 51 min ago
Dec 19 2012 | 12:41pm ET
Cerberus Capital Management began weighing the sale of its gunmaker within hours of last week's shootings at a Connecticut elementary school.
Shortly after the news broke that a gunman had killed 20 children, six adults and himself at the Newtown, Conn., school—possibly before they even knew that the shooter, Adam Lanza, had used a gun made by one of its portfolio companies—Cerberus executive met to consider their response to the tragedy, The Wall Street Journal reports. Eventually, Cerberus decided to sell Freedom Group, the gunmaker, announcing its decision yesterday.
The New York-based private equity giant spent the weekend discussing what to do; Freedom Holdings is among the largest gunmakers in the country; Cerberus created the company in 2007 when it merged several other firearms manufacturers it owned, including Bushmaster Firearms International—the brand of the rifle Lanza used—and Remington Arms.
Cerberus, led by avid hunter Stephen Feinberg, believes that Freedom is an important supplier to law enforcement and military personnel. It also believed the company is a good investment. But by Monday night, Feinberg had decided to sell.
He called Freedom Group CEO George Kollitides, a former Cerberus executive, to break the news. Kollitides then told Freedom Group's board that Cerberus hopes the sale would keep the firm out of the spotlight of the expected debate on gun control, a sentiment that Cerberus also expressed in its press release yesterday.
Cerberus also hopes the move will mollify any concerns investors might have; one, the California State Teachers' Retirement System, which has $500 million committed to Cerberus, said it had begun a review of its relationship with the private equity firm in the wake of the massacre.
According to the Journal, Feinberg did not consult with his father, a Newtown resident, before making the call to sell.