Smith & Wesson sale stalls over lawsuit threat

Tomkins, the conglomerate, is facing fresh obstacles to its unrequited hopes of selling Smith & Wesson, the famous gun manufacturer.

Greg Hutchings, the Tomkins chairman, had hoped that an agreement reached nine days ago with the US government would facilitate a sale.

Under the terms of the agreement, the US administration agreed not to sue S&W for the cost of gun violence, in return for a promise from the Massachussetts-based subsidiary that it would improve the safety of its weapons.

But the agreement still leaves S&W exposed to possible lawsuits from individual US states, and Mr Hutchings is unwilling to sell the division until the threat of legal liability has been lifted.

Although trade buyers for S&W are thin on the ground, analysts believe it would be a prized target for venture capitalists eager to secure its healthy cash flows at a knockdown price.

There is speculation that Ed Schultz, chief executive of S&W, would be party to any shot at taking private the business which made the six-shooters used by Wyatt Earp in the gunfight at the OK Corral.

Mr Hutchings appears finally to have bowed to City pressure for the rationalisation of the jumble of assets which makes up Tomkins.

He has already taken a major step towards focusing on its core engineering interests by announcing the planned disposal of RHM, its food products arm, which is expected to fetch £1.4bn.

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