By Ed Friedman
Cerberus Capital Management, the parent company of Freedom Group, filed an SEC Form S-1 Registration Statement on October 20. The Form S-1 is the paperwork required before issuing an initial public offering (IPO).
Freedom Group owns Remington, Bushmaster,DPMS Panther Arms, Marlin, Dakota Arms, Harrington & Richardson, New England Firearms, L.C. Smith and The Parker Gun, among other firearm-related companies.
The filing, along with retention of law firms for its preparation, strongly indicates an IPO will be forthcoming. Details, such as the initial stock price, ticker symbol and number of shares outstanding, are not yet public and may not yet be finalized.
On July 29, 2009, Freedom Group entered into a Registration Rights Agreement with Banc of America Securities, Deutsche Bank Securities, Wells Fargo Securities, Barclays Capital and Jefferies & Company. A Registration Rights Agreement allows the aforementioned companies to register their shares of the company—resulting from various prior financial transactions—should Freedom Group issue an IPO, making it likely these financial institutions will have an ownership stake in Freedom Group should it go public.
Cerberus does not comment on pending business activities, and underwriters who have details cannot legally release them, either, though there is some interesting information in the S-1 filing.
For the 12 months ending on June 30, 2009, Freedom Group’s subsidiaries sold approximately 1.1 million long guns and 2 billion rounds of ammunition, which made up the vast majority of its $835.3 million in net sales. The company estimates that it holds the top market position in shotguns (31 percent), traditional rifles (36 percent), modern sporting rifles (49 percent) and ammunition (33 percent). Firearms accounted for 60.9 percent of sales and ammunition 36.8 percent of sales, with the remaining 2.3 percent coming from accessories and licensing income.
The October 20 filing also elucidates Freedom Group’s growth strategy, paying particular attention to the global military and law enforcement markets. “…we view this area as having high potential for further penetration and growth for a wide variety of our existing products, as well as products we have recently developed and continue to develop,” the filing states.
Freedom Group director George Kollitides indicated much the same in a February interview with NRA Publications. “The military is focusing less on aircraft carriers, etc., and more on equipping the individual soldier for low-intensity conflicts, focusing on small-unit tactics for deployment in remote, difficult-to-access places,” he said. “This emphasis on the individual soldier and his/her reliance on firearms for protection is something we take seriously.”
Should the IPO go forward, Freedom Group will join Ruger and Smith & Wesson as publicly traded American firearm manufacturers. Ruger has been a public company since 1969 and has been listed on the NYSE since 1990. Smith & Wesson stock has been traded on the NASDAQ exchange since 2001.