(Corrects name of rifle in 1st paragraph to Bushmaster AR-15
from BushAR 15)
* Move follows pressure from CalSTRS pension fund
* To return sale proceeds to investors
* Cerberus shocked at killings, says Freedom not to blame
By Sakthi Prasad
Dec 18 Following pressure from a major investor,
U.S. private equity firm Cerberus Capital Management is selling
gunmaker Freedom Group, whose Bushmaster AR-15 rifle was used in
the Connecticut school massacre last week.
The California State Teachers' Retirement System (CalSTRS)
said on Monday it was reviewing its investment with Cerberus in
the wake of Friday's shooting, in which a gunman killed 20
children and six adults at Sandy Hook Elementary School and then
took his own life.
Before going to the school, the gunman, Adam Lanza, 20, shot
dead his mother in the home they shared, according to law
In addition to Cerberus, some gun retailers also took steps.
Dick's Sporting Goods pulled all guns from its store
closest to the site of the massacre in Newtown, Connecticut, and
suspended the sale of certain kinds of semi-automatic rifles
from its chains nationwide.
Wal-Mart Stores Inc took down an informational
website about semi-automatic Bushmaster rifles.
Cabela's Inc continued to sell Bushmaster AR-15
rifles on its website.
CalSTRS, the second-largest pension fund in the United
States, had invested $751.4 million with Cerberus by the end of
March 2012, according to its website.
Cerberus said on Tuesday it would hire a financial adviser
to sell its interests in Freedom Group and return the proceeds
The private equity firm expressed shock and grief at the
killings in Newtown but added that Freedom Group was not
"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," it said.
Cerberus bought firearms maker Bushmaster in 2006 and later
merged it with other gun companies to create Freedom Group,
which reported net sales of $677 million for the nine months
ended September, up from $565 million a year earlier.
Founded in 1992 by Stephen Feinberg and William Richter, New
York-based Cerberus has more than $20 billion under management
and shares its name with a mythical three-headed dog which in
Greek mythology guards the entrance to the underworld.
Besides Cerberus, a few other private equity firms also have
stakes in firearms companies. Sciens Capital Management, for
example, jointly owns small arms maker Colt Defense.
In an opinion piece published on Monday in Slate magazine,
former New York Governor Eliot Spitzer said pressure should be
stepped up on the owners of gun companies, like Cerberus, to
change the way they operate.
"It is time to determine pension fund by pension fund who
has invested in Cerberus and bring pressure on those investors
either to get out of Cerberus or have Cerberus change the way it
runs the gun industry," Spitzer wrote. (link.reuters.com/vuf74t)
Popular New York Times columnist Andrew Ross Sorkin, in an
opinion piece that was critical of private equity investments in
arms makers, took exception to the fact that Freedom Group and
other notable gun manufacturers had not commented on the
Both opinion pieces were published before Cerberus's
GUN CONTROL DEBATE
Cerberus said the Newtown tragedy was a "watershed event"
that has raised the national debate on gun control "to an
However, it added the firm was responsible for only
investment decisions it makes on behalf of its clients and does
not play the role of "statesmen or policy makers."
"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 said.
U.S. lawmakers have not approved a major new federal gun law
since 1994, and a ban on certain semi-automatic rifles known as
assault weapons expired in 2004.
The Newtown massacre has led President Barack Obama and some
congressional leaders to reconsider what has been a largely
hands-off approach to gun control in recent years.
The percentage of Americans favoring tough gun regulations
rose significantly after the killings at the Connecticut school,
a Reuters/Ipsos poll showed on Monday. [ID: nL1E8NHBRX]
(Editing by Hans-Juergen Peters, Mark Potter and John Wallace)