By Joshua Freed And Michelle Chapman Associated Press
The company that makes one of the weapons said to have been used to kill elementary school children in Connecticut is being put up for sale by its owner, which called Friday’s tragedy a “watershed event” in the debate over gun control.
The private-equity group Cerberus Capital Management said Tuesday it will sell its controlling stake in Freedom Group International, the maker of Bushmaster rifles. Investors also continued to bail out of other gunmakers while the retailer Dick’s Sporting Goods said it would stop selling military-style rifles.
The activity comes as the political winds appear to be shifting. Some Republicans now say they’re willing to discuss the issue of gun control — along with mental health issues and violent video games,
Cerberus cobbled Freedom Group together by buying Bushmaster, Remington, and other well-known gun brands starting in 2006. On Friday, a gunman using what is believed to have been a Bushmaster military-style rifle killed 26 people at Sandy Hook Elementary School in one of the worst mass shootings in U.S history.
“It is apparent that the Sandy Hook tragedy was a watershed event that has raised the national debate on gun control to an unprecedented level,” Cerberus wrote in announcing the planned sale. Cerberus owned 95 percent of Freedom Group, according to a year-end 2011 filing for the gunmaker on its website.
Freedom Group said it’s the largest firearms manufacturer in the U.S. It sold 1.1 million rifles and shotguns last year, along with 2 billion rounds of ammunition. Its products are sold to law enforcement and military customers, as well as retailers who sell them to hunters and gun enthusiasts.
The so-called Assault Weapons Ban that expired in 2004 restricted the sale of some types of guns like those made by Bushmaster. Freedom Group noted in its filing that new laws along the lines of the expired assault weapons ban “could have a material adverse effect on our business.”
Cerberus attempted to distance itself from that debate on Tuesday.
“We are investors, not statesmen or policy makers,” the company said in its statement. Firms like Cerberus are basically privately run pools of money that invest in companies on behalf of pension funds including those for teachers, police officers, and other institutions. “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,” the private-equity firm said.
The sale may have been influenced by one or more of those clients. 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.
Cerberus is best known for its investment in Chrysler. It ended up walking away from that investment as the U.S. government bailed out the car company.
Money made from the Freedom Group sale will be returned to its investors, Cerberus said.
Meanwhile, 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.
Shares in publicly traded gun makers were dropping for a third-straight day.
Shares of Sturm, Ruger &Co. dropped $3.21, or 7.3 percent, to $40.79 in midday trading Tuesday. They’re down 10.5 percent since Thursday, the day before the shooting. Shares of Smith &Wesson Holding Corp. fell more than 9 percent to $7.86, and are down 17.6 percent from their Thursday close.
Outdoor goods retailer Cabela’s Inc. fell 97 cents, or 2.4 percent, to $40.24.
A Cerberus spokesman did not return a phone message left on Tuesday. A representative for Freedom Group could not be immediately reached for comment.