Cerberus to sell gunmaker Freedom Group after shootings

A man lights a candle in front of a flag with the names of victims who died in the December 14 shootings at Sandy Hook Elementary School in Sandy Hook village in Newtown, Connecticut, December 17, 2012. REUTERS/Adrees Latif

(Reuters) – Following pressure from a major investor, U.S. private equity firm Cerberus Capital Management is selling gunmaker Freedom Group, whose BushAR 15 rifle was used in the Connecticut school massacre last week.

The California State Teachers’ Retirement System (CalSTRS) said on Monday it was reviewing its investment with Cerberus in the wake of Friday’s shooting, in which a gunman killed 20 children and six adults at Sandy Hook Elementary School and then took his own life.

Before going to the school, the gunman, Adam Lanza, 20, shot dead his mother in the home they shared, according to law enforcement officials.

In addition to Cerberus, some gun retailers also took steps.

Dick’s Sporting Goods (DKS.N) pulled all guns from its store closest to the site of the massacre in Newtown, Connecticut, and suspended the sale of certain kinds of semi-automatic rifles from its chains nationwide.

Wal-Mart Stores Inc (WMT.N) took down an informational website about semi-automatic Bushmaster rifles.

Cabela’s Inc (CAB.N) continued to sell Bushmaster AR-15 rifles on its website.

CalSTRS, the second-largest pension fund in the United States, had invested $751.4 million with Cerberus by the end of March 2012, according to its website.

Cerberus said on Tuesday it would hire a financial adviser to sell its interests in Freedom Group and return the proceeds to investors.

The private equity firm expressed shock and grief at the killings in Newtown but added that Freedom Group was not responsible.

“We do 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,” it said.

Cerberus bought firearms maker Bushmaster in 2006 and later merged it with other gun companies to create Freedom Group, which reported net sales of $677 million for the nine months ended September, up from $565 million a year earlier.

Founded in 1992 by Stephen Feinberg and William Richter, New York-based Cerberus has more than $20 billion under management and shares its name with a mythical three-headed dog which in Greek mythology guards the entrance to the underworld.

 

Reuters has the full article

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