Cerberus hasn't kept Newtown gun promise

Nine months after the Sandy Hook school shooting, the private equity firm has failed to fulfill its vow to sell off AR-15 producer Bushmaster.

By Jason Notte Sep 26, 2013 10:40AM
Firearms Training Unit Detective Barbara J. Mattson of the Connecticut State Police holds up a Bushmaster AR-15 rifle, on Jan. 28, 2013 (© Jessica Hil/AP)Some businesspeople just decided to talk a whole lot of junk after the elementary school shootings in Newtown, Conn., that left 20 children dead.

Dick's Sporting Goods (DKS) vowed to pull "modern sporting rifles," including the AR-15, from its shelves. Less than a year later, it was stocking them at its new Field & Stream stores. Oh well.


Cerberus Capital Management, the private equity firm that owns AR-15 maker Bushmaster as part of its Freedom Group holdings, vowed that it would divest itself of that stake "immediately."


A statement the company released on Dec. 14 of last year clearly spelled out Cerberus' position:


"We will retain a financial advisor to design and execute a process to sell our interests in Freedom Group, and we will then return that capital to our investors.  We believe that this decision allows us to meet our obligations to the investors whose interests we are entrusted to protect without being drawn into the national debate that is more properly pursued by those with the formal charter and public responsibility to do so."

Nine months later, Cerberus hasn't budged on its investment. Despite the facts that the father of the company's founder lives in Newtown and was shaken by the killings, and that offers for Freedom Group were rolling in as recently as July, the firm hasn't come close to a sale.


While Cerberus has never said it, a big reason for the hesitancy is implied by profit numbers, which Quartz has analyzed. Freedom Group is still making money for Cerberus. The gun company reports that second-quarter sales were 51% higher this year than in 2012. Considering that many Cerberus investors are state and municipal pension plans, there's a good chance they don't mind the extra money coming in.


In Cerberus' defense, the firearms business is booming. Although current gun owners still make up the vast majority of sales, the demographic makeup of multiple-gun owners has expanded since the Newtown massacre and the deadly shootings at a movie theater in Aurora, Colo., last summer.


Yet recent revelations by outdoor chain Cabela's suggest that while gun sales are still healthy, the boom is just about over. Background checks are still near record levels, but they've steadily decreased after a federal gun bill died in the Senate and as the nation's memory of recent shootings fades.


That last part is likely why Cerberus has had trouble not only finding a buyer for Freedom Group, but a bank to facilitate the sale.


However, as The Huffington Post reports, a group of activists is pressing Cerberus to keep its word and make the sale. A company spokesman said it received a letter from the activists Tuesday. He declined to comment and referred HuffPost to a statement Cerberus released in December detailing its intentions to sell the Freedom Group stake.


Cerberus still seems intent on doing that, or at least appearing as if it will.


Meanwhile, supporters who reply in painfully obvious fashion that Cerberus "is selling a legal product" and "can do what it wants with its business" miss the point entirely. In December, Cerberus cared so much about the events at Sandy Hook and the national discourse the tragedy sparked that it committed to publicly vow to take very specific action to address it.


Forces beyond its control may be partly responsible for its inability to keep that vow, but the fact that it's profiting from its failure to sell only undermines the integrity of both its statement and its business practices.


That's not a good look for a firm already named after a three-faced dog.


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11Comments
Sep 26, 2013 10:55AM
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in the famous words of hillary clinton

 

 "what difference does it make now?"

 

its been less than a year and bushmaster hasnt been sold yet.  big deal.

 

obama also said if elected he was going to close gitmo.  yet thats still open.  write a story on that jason.

 

obama also said if elected he was going to get the troops out of afghanistan.  write a story on that jason.

 

both those instances its been over 5 years, and you are crying because its been less than a year and bushmaster hadnt been sold yet?  you crybaby loser.

Sep 26, 2013 11:47AM
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TCerberus is obviously changing their mind.  Their promise, which was a stupid knee jerk reaction in the first place, has been quickly overridden by their GREED.  Or, maybe they just couldn't find a willing buyer, AT THEIR PRICE. . . Who knows. 

The entire anti gun movement is misguided, at best.  Hopefully, its supporters, like Cerberus, will come to their senses and back away from some of these idiotic moves.
Sep 26, 2013 10:56AM
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Anti-2nd amendment activists are so stupid.  Like every other progressive group, they put more value on rhetoric than actual results.  Thank goodness the good folks over at Dick's Sporting Goods and Cerberus were smart enough to know this.   I'll be heading over to Dick's to get some ammo in the next few days.
Sep 26, 2013 7:58PM
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Guns are legal.  There are crazy people out there that do extremely bad deeds. 

Law abiding citizens should be able to buy and sell guns.  I don't own a gun but it's fine with me if others own guns.  Whats more I don't care how many guns a person wants to collect it is their right..

 

Sep 26, 2013 1:11PM
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Every year it's estimated upwards of 2 million crimes are stopped by citizens with guns, without ever firing a shot.  Why is it the media NEVER mentions even one of them?  This isn't about guns, this is about absolute government control over every single aspect of your life.  Read Karl Marx. 
Sep 27, 2013 12:47AM
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They lied on all their promises to Chrysler too.
Sep 26, 2013 11:02AM
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why hasnt the author, jason, bought bushmaster yet?

 

i am guessing its because the geedy liberal run msn corporation isnt paying jason a living wage

Sep 27, 2013 6:07AM
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And the ''oaf in the WH'' said you could keep your doctor and healthcare costs would go down''! ! ! So this guy ''LIED'' to get the ''liberal''- - A-holes off his back. Shock of Shocks - - - BUSINESS TRUMPS LIBERAL UTOPIAN DREAMS! Think I'll go out and buy some more bullets for my assault rifle !  !
Sep 26, 2013 10:26PM
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Selling the company wouldn't do anything to reduce gun violence.  They were caught up in the political correctness of the moment.  After Obama and the media moved on to other things, it's business as usual. 
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