Cerberus Planning IPO for Firearm Company - Freedom Group

October 20, 2009 8:21 AM EDT

The private-equity firm Cerberus is moving its advanced preparations for an initial public offering of Freedom Group Inc., according to reports from the Wall Street Journal.

Cerberus is looking to build the company into an impact player in the rifle-and-ammunition business after failed acquisitions of Chrysler LLC and GMAC LLC (NYSE: GJM).

In the past three years Cerberus has acquired seven gun-and-ammunition companies, including the country's largest and oldest firearms maker Remington Arms Co., that have been consolidated into the Freedom Group Inc. Freedom is on track to be one of the world’s largest manufacturers of firearms and ammunition with expected earnings of $900 million this year.

With the current economic situation firearms have remained a strong seller. Attributing to this trend is the concern that restrictions on guns-and –ammunition will increase under the current administration. Also with the U.S. Military engaged in wars in Iraq and Afghanistan, the prospect for lucrative government contracts is a large opportunity for Freedom Group

Success of the Freedom Group IPO could temper the stress that Cerberus has felt since the losses taken on with investments in Chrysler LLC and GMAC LLC, which caused a $4.77 billion dollar withdrawal from the firm’s hedge funds. The firm currently manages $24 billion in assets.

Related Categories

IPOs

Stocks Mentioned

Related Entities

• Chrysler LLC
• Cerberus Capital
• Remington
• Hedge Funds
• GMAC

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