Six Months After Newtown, An American Gun Giant Struggles To Find A Buyer
Indeed, there were indications the decision to sell Freedom Group was made because some of Cerberus’ higher profile investors said they wanted no part of any gun companies following the Newtown massacre. When Cerberus revealed its plan to drop its stake in Freedom Group, it released a statement noting the company makes “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.” Some of those public pension funds were clearly eager to exit the gun business after the shooting. Many of those public pension funds announced their intention to stop investing in firearms manufacturers following the shooting. That included the California State Teachers’ Retirement System, which said it owned 2.4 percent of Freedom Group through investments in Cerberus.
But while the toxic cloud of the massacre likely caused Cerberus to attempt to unload Freedom Group, it also meant the sale almost immediately ran into trouble.
According to the Bloomberg news service, at least three major banks declined to work on the deal because of “potential damage to their reputations.” Anonymous sources speculated to the news service that Cerberus might have “to take a lower price or be unable to sell the business because so many banks are unwilling to work on the deal.” Eventually, Cerberus managed to hire the investment bank Lazard Ltd. to run the auction.
Even with a bank lined up, finding someone to pay top dollar for a gun company in the post-Newtown environment was tricky.