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The Gun Shots
December 21, 2012
What's In Store For Freedom Group - 1
by John B. Snow
One of the repercussions of the shootings in Newtown was the announcement by Cerebus Capital Management that it was going to “immediately” start the process of selling off its investment in Freedom Group. Freedom Group, in case you didn’t know, is the company that owns firearms makers Remington, Bushmaster, DPMS, Marlin, H&R, Para, Dakota Arms and The Parker Gun, as well as Barnes Bullets, Advanced Armament Corp. and other firms in the outdoor industry.
These holdings represent a small part of the assets of Cerebus, which has over $20 billion under its management. To put that in context, the net sales of the Freedom Group companies for the first nine months of 2012 was $677.3 million.
According to a report on the Wall Street Journal’s web site, Cerebus is looking for a single buyer to purchase Freedom Group, though it will be a significant challenge to find a single entity with the assets, or interest, to take over the entire portfolio of companies. I’ve heard the same thing in off-the-record conversations with Remington executives, who said that Cerebus doesn’t want to split up the brands.
The prospect of the companies being sold off piecemeal could spell big trouble for some of the brands, particularly Marlin and H&R, which have already struggled since production of these guns was moved from North Haven, Connecticut to the Remington facility in Illion, New York.
Cerebus made it clear in no uncertain terms that the shootings and the shifting political landscape prompted this decision. In a statement on the Cerebus web site the company said:
Even though Cerebus said it is starting this process right away, it doesn’t mean that Freedom Group is going to be sold quickly. “We might still be here in six months or even a year,” one Remington executive, who was not authorized to speak on the record, said. “I don’t think they want to break us up, that’s the understanding we’ve had. But they didn’t want to get sucked into the national debate. They’re not going to lose billions over millions.”
We’ll keep a close eye on this process as it unfolds and provide updates as new information comes to light.