Cerberus Capital Management previously announced that it would sell Freedom Group, which is comprised of some of America’s largest and most well-known gun manufacturers, late last year after the shooting in Newtown, Connecticut. Now nearly a year after Cerberus made clear its intentions to sell, the private equity giant has yet to hook a suitable offer. According to the International Business Times, troubles with the sale of Freedom Group include Cerberus CEO Stephen Feinberg withdrawing his own bid to buy the gunmakers, as well as several Wall Street banks refusing to finance bids for interested buyers. Additionally, spokespeople from the California State Teachers’ Retirement System (CalSTRS), a major investor in Cerberus, have expressed their disappointment in the equity management company for its inability to sell Freedom Group.
CalSTRS’ stake in Cerberus was one of the factors that had led the firm to announce the sale of Freedom Group last year. As one of the largest public pension funds in the nation, CalSTRS had an investment of $700 million in Cerberus at the time of the Newtown shooting. Shortly after the tragic event, CalSTRS began selling off its holdings in gun manufacturers as well as reviewing its investment with Cerberus.
Inside sources have told Reuters that Cerberus is considering a mechanism that would let its investors divest their equity interest in Freedom Group. By doing this, individual investors can sever their connection to the gunmakers. This is seen by some as an alternative to a sale of Freedom Group, but details have yet to emerge about this plan.
Freedom Group contains notable gun manufacturers such as Bushmaster, Marlin, and Remington Arms.International Business Times reported that the group earned $677 in net sales last year and $1 billion this year as of September 29. Cerberus currently values Freedom Group near $1.2 billion.