Cerberus plans to sell investment in gunmaker after Connecticut school shootings
Cerberus Capital Management, the investment firm that controls the Steward Hospital Health Care System hospital chain in Boston, said that it will sell its investment in Freedom Group, the company that makes the rifle that was used in the Connecticut school killings.
“We have determined to immediately engage in a formal process to sell our investment in Freedom Group,” the New York firm said in a statement. “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.”
A story in Tuesday’s Globe notes that Cerberus is one of the most powerful forces in the gun business. It owns Freedom Group Inc., a Madison, N.C., company that is the nation’s largest seller of firearms and the number two seller of ammunition. Freedom, according to its annual report, sold 1.1 million long guns and 2 billion rounds of ammunition that generated $775 million in sales last year.
Together with its gun brands, from Bushmaster to Remington, Freedom is a major contributor to the National Rifle Association and the fight against gun control, according to the Violence Policy Center, a Washington group that tracks corporate funding of gun advocacy.
Freedom’s chief executive, George Kollitides, worked previously for Cerberus, where he focused on buying companies in the firearms and defense businesses for the firm. Kollitides led efforts to buy Bushmaster Firearms Inc. from Windham, Maine, native Dick Dyke in 2006. The gun used in the Connecticut shootings, a Bushmaster .223 semiautomatic rifle, contained a 30-round ammunition clip that allowed the gunman to fire continuously inside the school.
Reuters reported that pressure mounted on Cerberus as the California State Teachers’ Retirement System (CalSTRS) said on Monday it was reviewing its investment with the private equity firm after the Connecticut school shooting.
The Massachusetts state pension fund is not invested with Cerberus.
In its statement on plans to sell Freedom, Cerberus Capital Management said: “We were shocked and deeply saddened by the events that took place at the Sandy Hook Elementary School in Newtown, Conn., on Dec. 14, 2012. We cannot comprehend the losses suffered by the families and friends of those killed by the unthinkable crimes committed that day.”
Cerberus is a private equity firm that invests in troubled businesses. It has in recent years had ownership stakes in automaker DaimlerChrysler and in GMAC, General Motors’ finance arm, and in real estate investments since the financial crisis.
Cerberus created Steward in Boston, by acquiring the former Caritas Christi hospitals. The Catholic hospital group includes St. Elizabeth’s Medical Center in Brighton and Carney Hospital in Dorchester.Casey Ross contributed to this report.