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| FILE - This March 27, 2006 file photo, shows a Bushmaster AR-15 semi-automatic rifle and ammunition on display at the Seattle Police headquarters in Seattle. The maker of the Bushmaster rapid-fire weapon used to kill schoolchildren in Connecticut on Friday, Dec. 14, 2012, was put up for sale on Tuesday, Dec. 18, 2012, as investors soured on the gun business. |
MINNEAPOLIS (AP) -- Investors shunned some of the nation's largest gun makers Tuesday, putting up for sale the manufacturer of the Bushmaster semiautomatic rifle used in the Connecticut school shooting and worrying that the attack could soon bring stricter gun laws.
Stocks
of other gun companies fell, and one sporting-goods chain said it would
temporarily stop sales of military-style firearms. In Washington, some
former opponents of gun control signaled that they may change their
position, potentially giving stricter gun laws their best chance of
passage in years.
The most notable rejection
of the gun industry came when the private-equity firm Cerberus Capital
Management announced it would sell the maker of the rifle used in the
massacre, which it called a "watershed event."
The
shooting "raised the national debate on gun control to an unprecedented
level," Cerberus said in a news release. "We are investors, not
statesmen or policy makers."
In an
acknowledgment of the changing political climate, the National Rifle
Association promised "to offer meaningful contributions to help make
sure this never happens again." It scheduled a Friday news conference.
Bushmaster, Remington and DPMS are among the brands made by Freedom Group Inc., the largest firearms maker in the U.S.
The
Madison, N.C., company sold 1.1 million rifles and shotguns last year,
along with 2 billion rounds of ammunition. Its customers include law
enforcement and military agencies, as well as retailers who serve
hunters and gun enthusiasts.
Cerberus, a large
private-equity firm best known for investing in Chrysler and other
troubled corporations, appeared to have been under pressure from two
sources: investors and the threat of more gun control.
Officials
at California's huge teacher pension fund said they were reviewing a
$600 million investment in Cerberus in light of the Connecticut
shooting. Through its stake in Cerberus, the California State Teachers'
Retirement System owns a 2.4 percent stake in Freedom Group.
Pension
fund spokesman Michael Sicilia confirmed the fund owns about $4 million
in shares of Sturm Ruger & Co. and $1.7 million in Smith and
Wesson.
Cerberus filed papers in 2009 to take
Freedom Group public, but it withdrew the bid in 2011 without saying
why. A Cerberus spokesman declined to comment Tuesday beyond the
company's statement.
Freedom Group has lost
money in four of the last five years, according to financial filings on
its website. Revenue in 2011 was $775 million, down from $848.7 million
in 2009. Slightly more than half of its 2011 revenue came from guns,
much of the rest from ammunition.
The assault
weapons ban that expired in 2004 restricted the sale of some types of
guns like those made by Bushmaster. The adoption of a similar law "could
have a material adverse effect on our business," Freedom Group said in a
statement.
In 2010, Freedom Group said it
would close its Bushmaster plant in Windham, Maine, and shift the work
to a plant in Ilion, N.Y. At the time, New York Sen. Charles Schumer
praised the move as a way to strengthen Remington's ability to compete
for Defense Department gun contracts.
Firms
like Cerberus are basically privately run pools of money that invest in
companies on behalf of pension funds. On Tuesday, the fund attempted to
distance itself from the national debate.
"It
is not our role to take positions, or attempt to shape or influence the
gun control policy debate," the firm said. "That is the job of our
federal and state legislators."
Meanwhile,
Dick's Sporting Goods Inc. suspended sales of all "modern sporting
rifles," the industry term for military-style guns. The company also
removed all guns from display at its store closest to Newtown.
Dick's
has not promoted military-style guns as much as some other retailers.
Its circular distributed in newspapers on Sunday had a full page of
hunting rifles, but no military-style ones.
By
contrast, St. Paul-based retailer Gander Mountain featured in its own
flier the Black Rain Ordnance PG9, a military-style semiautomatic rifle,
for $2,000. Other military-style guns were also advertised, including
several from Bushmaster. Such ads are generally printed well in advance
and would have been prepared before Friday's shooting.
A Gander Mountain spokesman declined to comment on whether it would change its gun lineup.
Wal-Mart
Stores Inc., which offers Bushmaster rifles in some stores, said it
would not change the guns it sells, but company spokesman David Tovar
said the web listing for the Bushmaster "was taken down in light of the
tragic events."
All the talk about additional
gun control appeared to be driving increased gun sales, though. The
Colorado Bureau of Investigation said it received a record 4,154
requests for background checks on Saturday, the day after the shooting.
That was slightly more than on its normal biggest day, Black Friday.
Bob
Irwin, CEO of The Gun Store in Las Vegas, said customer traffic has
jumped since the school shooting, with many customers concerned that
more gun laws will be enacted. He has not pulled any guns from the
shelf.
"My belief is the individual nutcase
did this," he said. "The company that manufactured the gun didn't. That
seems silly to deprive my normal customers of product because somebody
misused a product from the same company."
Irwin agreed that the Connecticut attack demanded some kind of action. He suggested adding more security officers at schools.
Shares in publicly traded gun makers declined for a third-straight day.
Shares
of Sturm, Ruger & Co. dropped 7.7 percent to close at $40.60. They
have fallen almost 11 percent since Thursday, the day before the
shooting. Shares of Smith & Wesson Holding Corp. fell 10 percent to
$7.79 - down almost 15 percent from their Thursday close.
Outdoor goods retailer Cabela's Inc. fell almost 6 percent to close at $38.77.
