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Cerberus to Sell its Stake of Gun Maker Following Connecticut School Shooting
Cerberus, the private equity firm that has a stake in a firearms company, has said it will sell its stake because one of the weapons used in the Newtown, Connecticut shooting is believed to have been produced at the company, according to The Associated Press.
Without saying that it has a role or taking a position in the gun control debate, Cerberus said that it is taking what action it can by selling the stake it has in the Freedom Group. The Freedom Group makes the Bushmaster rifle.
Friday morning, at Sandy Hook Elementary School, 20 children and six staff members were killed by a lone gunman, who reportedly used a .223-caliber Bushmaster AR-15 rifle. The rifle is a civilian version of the military M-16. In 1994, the gun was outlawed in the United States b the assault weapons ban. The law expired in 2004 and Congress did not review it under pressure from the gun lobby.
Cerberus has decided to distance itself from the issue. In a statement from the company, Cerberus said the following:
“We are investors, not statesmen or policy makers. Our role is to make 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. 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.”
It also seems like investors have been pulling their shares in firearms so far this week. Early in the day on Tuesday, shares for Sturm, Ruger & Co. dropped seven percent. Shares for Smith & Wesson Holding Corp. dropped by nine percent.
Cerberus said on Tuesday that it was deeply saddened by the shooting in Connecticut and that it is going to hire a financial adviser to aid in the sale process. Freedom Group also produces Remington Arms. The company’s announcement was made just one day after the California State Teachers Retirement System said that it was going to review its $500 million investment with Cerberus because of the stake it holds in Freedom Group.
Freedom Group was first invested in by Cerberus back in 2006. Cerberus noted that Freedom Group does not sell its weapons or ammunition to consumers and that it does not believe “Freedom Group or any single company or individual can prevent senseless violence or the illegal use or procurement of firearms and ammunition.”