Cerberus to offload stake in gun maker after Sandy Hook massacre
US private equity outfit Cerberus is looking to sell its investment in Freedom Group, the firm that makes the rifle used in the Sandy Hook school massacre last week.
The debate over gun laws in the US has been dramatically reopened in recent days after disturbed 20-year-old Adam Lanza killed his own mother, then 20 children and six teachers in a Connecticut school last week. It’s not surprising then, that Cerberus Capital Management, a private equity group that owns a stake in major US gun maker Freedom Group, is bowing to pressure to dump its share.
So what, apart from the global media storm after Sandy Hook, has prompted the firm to consider selling its stake? Well, the California State Teachers’ Retirement System (Calstrs) announced on Monday that it is reviewing its investment with Cerberus following the shooting in Connecticut. It also doesn’t help that Freedom Group manufactured the AR 15 rifle that was used to carry out the massacre, either.
Bosses at Cerberus are evidently not stupid. Calstrs is the second-largest pension fund in the US, and has more than $750m invested with the private equity firm. That’s a serious pot of assets for Cerberus to lose, so it said on Tuesday that it will hire a financial adviser to dump the investment in Freedom Group, and will return whatever cash is raised by the sale to its own investors.
