Newtown shootings prompt U.S. firm to sell gunmaker
U.S. vulture fund divests stake in Freedom Group in wake of massacre at Connecticut school
Backlash from the second-worst shooting in U.S. history has prompted private equity fund Cerberus to sell its stake in Freedom Group, a company that makes guns including the Bushmaster rifle used in last week's massacre at Sandy Hook Elementary School in Newtown, Conn.
Late Monday, Cerberus described last week's killings as a watershed date in America's gun control debate. While the private equity firm said it's not its role to take positions or attempt to shape or influence the gun control debate, the company says it can take action by selling its stake in Freedom Group.
"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," the company said in a statement, adding that it was "deeply saddened" by Friday's events.
Gun control debate
Twenty children and six staff members were killed at Sandy Hook. The 20-year-old gunman used a .223-calibre Bushmaster rifle during the massacre.
Although always controversial, the gun industry is big business in America, worth $31.8 billion US last year, an increase from $27.8 billion in 2009, the National Shooting Sports Foundation says. The NSSF says the gun industry has created 209,750 American jobs.
Unlike most other industries, the gun industry didn't see a slowdown during the recession. Gun sales in the U.S. have increased 30 per cent since 2008.The FCI says it has done 16.8 million background checks on people applying to buy guns this year alone — the highest figure since the agency began releasing the data in 1998.
Democracy watchdogs in the U.S. have also estimated that the National Rifle Association spent at least $24.28 million on supporting certain candidates over others in the recent U.S. election.
Cerberus Capital Management makes investments on behalf of clients that include the pension plans of firemen, teachers, police officers, and other municipal workers and unions, endowments and other institutions and individuals.
Cerberus has been described as a "vulture fund" — a term used to describe investment groups who make money by investing in troubled assets after they have seen their value erode, and selling them after the business has been turned around. The company used to own automaker Chrysler.
Cerberus said said it has hired an unnamed financial adviser to help with the selling process, which will be completed as soon as possible.
Cerberus has owned its stake in Freedom Group since 2006. The company notes that Freedom Group doesn't sell weapons or ammunition directly to consumers, and that it does 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."