Bushmaster AR-15 Semi-Automatic Rifle
By Paul M. Barrett
An out-of-the-blue unsolicited $1 billion takeover bid for Freedom Group, the largest gun and ammunition manufacturer in the U.S. The March 11 proposal by a little-known Palm Beach, Fla., company called Global Digital Solutions struck me as dubious, given the would-be buyer’s tiny size and lack of a track record in the insular small-arms business. The needle on my bizarre-o meter twitched when Global Digital (GDSI) couldn’t put me in touch with its founder and chief executive, a serial tech entrepreneur named Richard Sullivan. Finally, there was the vituperative reaction from Freedom, a privately-held conglomeration controlled by the New York-based private equity firm, Cerberus Capital Management. What the heck is going on here?
That Cerberus might unload Freedom Group—whose brands include Remington, Bushmaster, DPMS/Panther Arms, Marlin, Para USA, and Barnes Bullets—isn’t so far-fetched. Bushmaster manufactured the semiautomatic military-style rifle used by the killer in the December 2012 Newtown, Conn., elementary school massacre., and investor outcry following that horrific event put pressure on Cerberus to announce it would seek a buyer for Freedom Group. After shopping the company around for a while, Cerberus said it would recapitalize Freedom in an arrangement allowing antsy investors to step away from the gun business.
Global Digital’s Richard Sullivan, who eventually got back to me, insists that his ardor for Freedom is genuine. Despite the puny financial scale of his current operation, which trades over-the-counter and has a market capitalization of less than $60 million, Sullivan says he has a long history of starting and acquiring companies—and that he has big ideas for consolidating the fragmented U.S. gun business.
On the other hand, well-made guns get the job done with current designs, and many users—whether military, police, or civilian—probably would have concerns about relying on a fancy computer system vulnerable to the sort of techno-glitches that occasionally bedevil laptops or automobiles. Sullivan communicates in an almost mystical techno-speak that might stir suspicion in the borderline-paranoid world of gun manufacturing. Even after talking with him, I can’t tell whether he’s making a real offer for Freedom engaging in an elaborate publicity stunt, or indulging a flight of fancy. Maybe it’s a combination of all three.
“We’re working on raising the capital, and we have serious intentions,” Sullivan says. “We want to make a transformative technological contribution to an industry that’s stuck in analog and inevitably must participate in the digital world transition that’s going on. This is about convergence.”
Sorry, still not following. Sullivan speaks about “coupling cyber-based technologies with enhanced digital product development.” He says he’s been through the process before with a company called Applied Digital Solutions.
As best I could tell, Sullivan shares an ambition with a number of other techies to implant firearms with chips that would allow owners to prevent unauthorized people (children, thieves) from misusing their weapons. Such “smart gun” technology theoretically could help locate lost guns and allow for digitally enhanced targeting. It sounds a little like science-fiction, but others are moving in this direction.
The larger potential payoff, though, would be in the civilian sector. TrackingPoint rifles feature a Wi-Fi transmitter that permits a high-end hunter to stream live video and audio to an iPad (AAPL) and post impressive kill shots on Facebook (FB)and YouTube (GOOG). Depending on how tricked-out consumers want their customized weapon, TrackingPoint offers rifles for $22,000 and up.