Today, the groundswell of American support for stricter gun control that followed the elementary school shooting in Newtown, Connecticut, died with a whimper in the US Senate. Legislators blocked a vote on a bill, already watered down, that would have subjected more would-be gun buyers to background checks. That follows last month’s failure to vote on banning the kind of semiautomatic assault rifle that was used in Newtown.
It’s bad news for proponents of gun control, who felt this was their moment to enact stricter measures. But it’s great news for the private equity fund that’s trying to sell America’s largest gun company.
Cerberus Capital Management—named after the three-headed dog that, in Greek and Roman mythology, guards the entrance to hell—said in the wake of the Newtown shootings that it would unload its portfolio of firearm and ammunition manufacturers, which it calls Freedom Group. But the sale has been delayed by reluctance among banks to run the auction, uncertainty about the likelihood of new regulation, and a paucity of buyers willing to scoop up the company that made the gun used in Newtown.
In the last few months, however, investment bank Lazard has agreed to handle the sale, and now gun control is dead. The only remaining question was whether a buyer would emerge, but that was resolved yesterday by Cerberus co-founder and CEO Stephen Feinberg, who is said to be exploring a bid along with others to buy Freedom Group from his own firm. It’s kind of an insurance policy against a low bid from elsewhere, since Cerberus has made it clear it needs to sell the company.
But with an assault weapons ban and background checks off the table, Cerberus may well be able to fetch $1 billion or more for its gun properties—an outcome that seemed unlikely just a few months ago.