Stephen Feinberg, private equity tycoon, is considering a bid for the shareholdings over the Bushmaster rifle manufacturer that the firm he founded has just put up for sale. Cerberus Capital Management LP is divesting its ownership over the weapons maker as fallout from the Sandy Hook Connecticut school shooting.
Feinburg is pooling together with other senior members of the private equity firm to form a 'stalking horse' offer designed to increase the value of Freedom Group, the manufacturer of the Bushmaster. This was confirmed by three anonymous sources familiar with the current situation.
Cerberus is feeling pressure from its investors and the general public to put up its shareholdings in the Freedom Groop after the December massacre that occurred in Newtown, Connecticut.
Should a bid formalize, this is a rare occurrence in the private equity industry as Feinberg is buying shares from the company he also owns, raising many conflict of interest issues. It can also place Feinberg and senior ownership against limited partners of the same firm. There is also a growing suspicion that the shares have been a hard sell, as major equity firms and banks have shunned to bid for the controversial gun maker.
Join the Conversation