Cerberus founder and business icon Stephen Feinberg is expected make his own bid for the Freedom Group, in cooperation with some of the firm’s other senior partners. The American private equity firm Cerberus Capital Management announced the sale of the Freedom Group late last year, due in part to public pressure after the Newtown tragedy in which 27 people lost their lives. At the time the firm said, “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 Freedom Group is comprised of many well-respected gun manufacturers, such as Remington Arms and Bushmaster, and commands a sizable presence in the firearms industry. However, according to Reuters, Cerberus may have trouble finding bidders for the company. Although not finalized, the bid from Feinberg is a rare move that could indicate a lack of interest in the auction. A bid from the Cerberus founder can drive up bids, but may also lead to internal conflicts.
Feinberg’s expected bid causes various conflict of interest issues within the auction process, and could potentially place his interests against those of the company’s investors. To resolve this, Rueters reports that were Feinberg to make a bid several safeguards would have to take place to ensure a fair auction. An independent committee will be gathered from industry experts is to sit with Feinberg and his partners for negotiations, along with a shareholders committee.
There was speculation several months ago that Brazilian firearm manufacturer Taurus was interested in acquiring the company.
Cerberus has also hired Lazard Ltd to assist in the auction.