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The massive Manhattan private-equity firm that owns the company that produced the military-grade AR-15 Bushmaster assault rifle used by Adam Lanza in the Sandy Hook school massacre wants out of the gun business. In a sign of how badly the industry has been shaken, Cerberus Capital Management, run by billionaire and avid hunter Stephen Feinberg, said it will put its $900 million Freedom Group on the market.
“It is apparent that the Sandy Hook tragedy was a watershed event that has raised the national debate on gun control to an unprecedented level,” the $20 billion conglomerate said in a statement.
Feinberg’s 86-year-old dad, Martin, lives in Newtown, Conn., site of the massacre.
“It is not our role to take positions, or attempt to shape or influence the gun-control policy debate,” the Cerberus statement said. “There are, however, actions that we as a firm can take.”
That action is selling the highly profitable company that owns Bushmaster, Remington and other gun manufacturers.
The .223 caliber AR-15 that Bushmaster makes is a clone of assault rifles carried by US troops. Adam Lanza used one in his rampage, which left 20 first- graders and six educators dead. The company aggressively markets the rifle to young men, saying that a purchaser of a new AR-15 can “consider your man card renewed.”
The decision to sell the company came as New York City Comptroller John Liu said he will review the city’s pension fund holdings, which include investments in Smith & Wesson worth $1.6 million; $2.3 million with firearms maker Storm, Ruger; and $13.9 million with Olin Corp., which manufactures ammo.
New York state is taking similar action.
California pension authorities also said they’d review their investments in the wake of the Newtown tragedy.
Freedom Group had reported huge sales since the election of President Obama — spurred by gun enthusiasts fearing a push for new controls.
The gun portfolio will likely be snatched up by a European or South American firearm company, analysts said.
Meanwhile, the National Rifle Association, which doggedly backs gun makers and owners, yesterday broke its silence on the Connecticut massacre, saying “is prepared to offer meaningful contributions to help make sure this never happens again” and will have an announcement Friday.
And Dick’s Sporting Goods Inc., the largest US sporting-goods chain, with 500 shops, said it will stop selling “modern” sporting rifles, which include the AR-15 and other military-style semiautomatic long guns.
It also stopped all gun sales in its location near Newtown “out of respect for the victims and their families.”
Another national retailer, Cabela’s, said it would halt sales of the Bushmaster AR-15 at its Connecticut locations.
Walmart, which is responsible for nearly 15 percent of the Freedom Group’s sales, said it took the Bushmaster AR-15 off it’s Web site only and has not changed the “assortment of guns” it sells.
Those modest steps, however, did little to quell demand by people who fear new calls for gun controls, with retailers around the country reporting a sharp uptick in sales. Some even reported lines out the door.
Still, Wall Street soured on publicly traded stocks of gun manufacturers.
Sturm, Ruger & Co., which trades on the New York Stock Exchange, dropped 3.4 percent. Smith & Wesson, a Nasdaq company, fell 10 percent.
Additional reporting by Michelle Celarier