Cerberus' Freedom Group guns for $200 million IPO

NEW YORK Wed Oct 21, 2009 6:09pm BST

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NEW YORK (Reuters) - Private equity firm Cerberus Capital Management CBS.UL is planning to take gun maker Freedom Group Inc public in a $200 million initial public offering, according to a regulatory filing.

Freedom Group, which designs, manufactures and markets firearms under brands that include Remington, Marlin, Bushmaster, Parker and Nesika, said in the filing it has the largest market share in all of its major product groups in the United States.

Cerberus, which owns 94.3 percent of Freedom Group's shares according to the filing, could use a successful IPO after sustaining massive losses from its investments in carmaker Chrysler and in GMAC.

Earlier this month, Cerberus successfully took public one of its portfolio companies, plasma-based protein therapy maker Talecris Biotherapeutics Holdings Corp TLCR.O. Talecris raised $950 billion and rose 11.3 percent in its debut. Shares were up 2.6 percent over the IPO price on Wednesday.

But the filing comes at a time when several other private equity backed IPOs have stumbled in their debuts. Last week, RailAmerica RA.N, owned by funds managed by Fortress Investment Group LLC (FIG.N), fell 8 percent in its debut after pricing below expectations.

Freedom Group sold about 1.1 million long guns and 2 billion rounds of ammunition in the year ended June 30, 2009, according to its prospectus, filed on Wednesday with the U.S. Securities and Exchange Commission.

In 2006, Cerberus bought Bushmaster Firearms, and in 2007 bought Remington Arms, the largest U.S. maker of rifles. Subsequently, it bought gunmakers DPMS Firearms and Marlin Firearms to form Freedom Group.

Freedom Group did not specify what it would use the IPO proceeds for beyond saying they were for working capital and general capital

The company reported net sales of $427.3 million for the six months ended June 30, up 34.9 percent over the year earlier period, and net income of $32.8 million.

(Reporting by Phil Wahba in New York, and Sayantani Ghosh in Bangalore; Editing by Anne Pallivathuckal and Steve Orlofsky)

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