The private equity firm that owns Remington Arms, Marlin Firearms and Bushmaster, which made the gun used in the Newtown killings, is selling the businesses as a result of the outcry over weapons since Friday.
Those gun-makers and several others are part of a company called Freedom Group, which has become a dominant force in the firearms industry over the last five years. Freedom Group was assembled and is 95 percent owned by Cerberus Capital Management, which said in a statement released Tuesday that it will sell the group of companies.
The statement was highly unusual in the private equity world, in which firms typically say little or nothing about their investment decisions other than in financial filings.
“It is apparent that the Sandy Hook tragedy was a watershed event that has raised the national debate on gun control to an unprecedented level,” Cerberus said. “As a Firm, 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.”
The firm has a close connection to Newtown: The 86-year-old father of Stephen A. Feinberg, the billionaire financier who founded and heads Cerberus, lives in a private community in the town.
I couldn’t reach either Feinberg Tuesday, and the company did not comment on whether Stephen Feinberg visited Newtown or talked with people in the town before making the decision to divest.
Some people in Newtown, hearing about the decision Tuesday, considered it a magnanimous and noble move. But it also comes at a time when the firearms industry — which sells a significant number of semi-automatic rifles and pistols — is under intense pressure as a result of the massacre.
On Monday, the California state treasurer instructed that state’s retirement funds to re-evaluate and possibly sell its investments in companies that make firearms that are illegal in California — including the Bushmaster AR-15-style rifle used by the gunman in Newtown, Reuters reported.
CalPERS, the California Public Employee Retirement System, has committed $400 million to Cerberus’s latest, $3.5 billion fund, Reutrers reported, citing public records.
“The Treasurer’s view is that neither fund should be invested in any company that makes guns that are illegal in this state, especially ones that were used to kill 20 innocent children and six innocent adults,” Tom Dresslar, a spokesman for California Treasurer Bill Lockyer.
A group called New Yorkers for Sensible Gun Control called for a vigil at Feinberg’s East Side townhouse Tuesday evening, and noted on a web site that the event would go on despite the Cerberus announcement.
Cerberus bought Bushmaster in 2006 and formed Freedom Group, including Remington Arms, the historic gunmaker founded in New York in 1816 and later located in Bridgeport. Freedom Group in 2008 bought Marlin, which was founded in 1870 by a former Colt worker.
In 2011, Freedom Group closed several plants, including the Marlin factory in North Haven, which had employed 365 people in 2008.
Advocates for a ban on assault weapons are calling for immediate legislation and many are saying the Newtown tragedy will be a tipping point in the long debate about how to control military-style weapons. In my column posted Monday, I note that a ban will be extremely difficult to enact, will not work unless it’s part of a broader set of measures and will not be a large part of the solution to gun violence in America.
It’s unclear how much of the Freedom Group profits come from military-style firearms. The main industry groups, including the National Rifle Association and the National Sport Shooting Association, which is based in Newtown, have remained mum since the tragedy but NRA said it will have a major announcement Friday.
Yet to be seen is how the sale of Freedom Group will affect the national debate, and the firearms industry. Shares of the two publicly traded gunmakers — Sturm, Ruger & Co. of Fairfield and Smith & Wesson of Springfield — were each down 15 percent and 21 percent, respectively, from Friday morning to Tuesday’s close, but both are up dramatically from three years ago.
Cerberus put its move in perspective: “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.”