Gun companies are going public

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http://online.wsj.com/article/SB125599020732295081.html?mod=WSJ_hpp_sections_business


First part of the article.
After bad bets on cars and home loans, Cerberus Capital Management is turning to guns and bullets.

The private-equity firm is in advanced preparations for an initial public offering of Freedom Group Inc., said people familiar with the situation, hoping to sell shares in a little-known company it has built into a dominant player in the red-hot rifle-and-ammunition business.

Over a three-year span, Cerberus -- while under the spotlight for ill-fated acquisitions of auto maker Chrysler LLC and lender GMAC LLC -- has acquired at least seven U.S. gun-and-ammunition makers.

Those companies have been consolidated into a Madison, N.C.-based company called Freedom Group Inc. It is on track to generate about $900 million in sales this year, according to a person familiar with the results. That makes Freedom one of the world's largest manufacturers of firearms and ammunition.
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Hmmm, interesting.

I wonder how much a share would be. Maybe they'd do what Wrigley does every Christmas and send out a box of company product to shareholders :evil:
 
Wow, great, big corporate buying out and consolidating all the big gun companies. Just wait till they get enough pressure on em to stop manufacture of this or that. BAD situation indeed.
 
Their list of acquisitions is hardly a consolidation of the gun industry. As for me, I'd much rather names like Marlin continue to exist with equity infusions from private capital. Otherwise, they might just have gone out of business with their aging machinery and lackluster profits. That the private equity groups like Cerberus would be spending their investor's money as some conspiracy with Obama to shut down the gun industry is a so laughable I have to cry.

That Cerberus wants to spin off their firearms related acquisitions into a public offering is not some new consolidation of power. It is just the opposite, a selling of ownership to the public. The private investors can then sell their shares at market value, which is more likely to be realized in the public market than in the private markets. That's the reason they invested their money with Cerberus to begin with - to make money on their investment.

I think Cerberus probably needs to do something positive for its investors after losing their a** on Chrysler and GM.

Here is a partial list of companies Cerberus has acquired. It probably is not complete.

Bushmaster Firearms (tactical)
Cobb Manufacturing (tactical)
Remington Arms
Marlin Firearms (which includes H&R, New England Firearms, Parker, LC Smith)
DPMS Panther Arms (tactical)
Advanced Armament Corp (silencers)
 
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While most of the companies that fall under the freedom group could benefit from a capital infusion, I'm concerned that the drive to make the next quarters numbers look good will lead to short-sighted management decisions.
 
My point was this...whats to stop Bloomburg "the billionaire mayor" from buying the shares
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Who cares? Let's say he bought them and immediately closed them down. There would be new companies opening up so fast, it would make your head spin. That's how free enterprise works. Bloomberg could buy these out till he is blue int he face and more would crop up. There are dozens and doaens of companies making AR stuff now. There are dozens of other gun manufacturers with more people eying it and waiting to see if they could make it as a manufacturer...
 
I'm concerned that the drive to make the next quarters numbers look good will lead to short-sighted management decisions.
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Indeed, that's always the conundrum. Who will make the best decisions for long-term economic health of the company, and what are those decisions? Answering these questions is supposedly why the corner office guys went to B-school, and why they say they deserve so much dough.

But we're getting away from guns here.
 
Most politicians have their assets in "blind trusts" due to their ability to sway public opinion and award contracts. They are usually not allowed to buy or sell stock while in office. But on an up note, if other companies see that there is money to be made in anything, they will get into the business and compete for market share. That would drive prices down for the consumer.
 
If they consolidate and need a government bailout, Do you think they might set up a cash for plinkers program?

blindhari
 
whats to stop Bloomburg "the billionaire mayor" from buying the shares
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There are laws in place to prevent the secret acquisition of a controlling share of a public company. You can only obtain a certain percentage, I believe it's 5% (could be 10%), then you have to go through a disclosure process with the SEC and jump through hoops before taking over a controlling interest in the co.
 
whats to stop Bloomburg "the billionaire mayor" from buying the shares
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Shareholders are not directors/managers. The most he can do is try and get people on the board he wants. Shareholders are lenders of capital, they do not make strategic decisions. He couldn't just shut a company down. And directors have a fiduciary duty to shareholders which means they cannot just close down. They have a high legal duty to make decisions for the corporation that would result in good returns for shareholders.

S&W is public. Bloomberg hasn't gone after them. He won't go after Freedom Group.
 
My point was this...whats to stop Bloomburg "the billionaire mayor" from buying the shares.
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And then what? Shut it down and cost himself millions or billions? That's NOT how billionaires think - they invest to MAKE money, not lose it
 
I would seriously doubt that Cerebus is looking at holding this long-term - not their typical MO. Buy it up, sell some off, make it turn a profit, then sell it for a profit and move on. When you figure Remington, marlin, H&R, NEF DPMS and the others - I see a split into two companies - a sporting one and a militarty/LE one, with the ammunition business possibly being sold to a third party. JMO, YMMV
 
This could also be a good thing for us if the companies are run properly. A consolidation of production and distribution assets could significantly lower the cost of the products on the shelves. It is called "economies of scale", and the theory is that the bigger you are, the less you have to spend per item that leaves your factory.

On the other hand, if they try to use their leverage to bulge prices even more than they already are, new entrants will come in and eat up market share faster than you can say "free enterprise".
 
This could also be a good thing for us if the companies are run properly. A consolidation of production and distribution assets could significantly lower the cost of the products on the shelves. It is called "economies of scale", and the theory is that the bigger you are, the less you have to spend per item that leaves your factory.

On the other hand, if they try to use their leverage to bulge prices even more than they already are, new entrants will come in and eat up market share faster than you can say "free enterprise"
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I see this more as a way for them to compete with the current eastern European and Chinese stuff that is flooding our shores because a lot of folks see "price" as their only consideration in buying something, especially a gun
 
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