Distribution and Manufacturing Agreements update
31 March 2017
Sprue Aegis plc
("Sprue" or the "Company")
Distribution and Manufacturing Agreements update
· Each of Distribution and Manufacturing and Supply Agreements with Newell Brands to be terminated
· Sprue's obligation to pay the fixed annual distribution fee of £2.9m ends on 31 March 2018
· Signed transformational manufacturing agreement with Flex
· Signed a separate agreement with a leading Far Eastern manufacturer to supply replacement products to the BRK range
Sprue (AIM: SPRP), one of Europe's leading developers and suppliers of home safety products, today announces the following update relating to its Distribution and Manufacturing and Supply Agreements.
Distribution Agreement ("DA") and Manufacturing Agreement ("MA")
Sprue announces that it has received the requisite 12 months' written notice from Newell Brands Inc. ("Newell"), to terminate the distribution agreement entered into between Sprue and BRK Brands Europe Limited ("BRK") dated 10 April 2010 which was extended by both parties for a further three years from 1 April 2015. The DA will terminate on 31 March 2018.
Expiry of the 12 months' notice period on the DA will end Sprue's obligation to pay the fixed BRK annual distribution fee of £2.9m and Sprue's right to distribute BRK's products and brands in Europe, both with effect from 31 March 2018.
Sprue announces that it has also received the requisite 12 months' written notice from Newell to terminate its manufacturing and supply agreement with DTL. The MA will terminate on 31 March 2018.
While Newell has given notice to terminate the DA and MA, Sprue will continue to purchase and source products under both agreements until 31 March 2018, and honour its contractual commitments.
Commenting, Mark Tarchetti, President of Newell Brands, said:
"Having considered various different options with Sprue, it became clear that the best interests of both parties would be served by Sprue and Newell going their separate ways. Newell therefore decided to serve the requisite 12 months' written notice on Sprue to terminate both the BRK Distribution Agreement and the DTL Manufacturing Agreement. Newell will of course honor any contractual commitments and we intend to work with Sprue on an orderly transition. We wish the Sprue Board well with their future plans."
Appointment of two new strategic manufacturing partners
The Company is pleased to announce that it has today entered into a manufacturing and supply agreement ("MSA") with Flex to source a range of smoke and heat alarms and accessories from the Flex facility in Tczew, Poland.
With approximately 200,000 professionals across 30 countries, Flex is the Sketch-to-Scale™ solutions provider that designs, manufactures and distributes Intelligent Products for a Connected World™. For more information, visit www.flex.com.
The Company has also entered into an additional supply agreement with a leading manufacturer based in the Far East to purchase alternatives to the BRK products.
As previously announced, Sprue will announce its audited final results for the year ended 31 December 2016 on 4 April 2017.
Graham Whitworth, Executive Chairman of Sprue, commented:
"We are delighted to announce the appointment of two new manufacturing partners which will significantly increase Sprue's scale and value proposition. We do not expect any significant disruption to the supply chain as we transition to source products from our new manufacturing partners.
Whilst the relationship between Sprue and Newell was successful, moving forwards the changes we have announced today will allow Sprue to focus more on developing its core and emerging technology strategy. With its global manufacturing footprint and extensive manufacturing experience, we believe Flex is well positioned to help Sprue expand its addressable markets beyond Europe. Combined expertise with greater independence is expected to accelerate development of new products and growth with greater control.
During this exciting new transitional period of our business development, we will continue to work closely with all of our stakeholders and believe the changes outlined today will significantly enhance shareholder value."
The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
For further information, please contact:
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Sprue Aegis plc |
02477 717700 |
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Graham Whitworth, Executive Chairman Neil Smith, Group Chief Executive John Gahan, Group Finance Director |
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Stockdale Securities |
0207 601 6100 |
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Tom Griffiths |
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Vigo Communications |
020 7830 9700 |
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Jeremy Garcia / Fiona Henson / Antonia Pollock |
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Notes to Editors
About Sprue Aegis plc
Sprue's mission is to protect, save and improve our customers' lives by making innovative, leading edge technology simple and accessible. Sprue is one of the market leaders in the European home safety products market and launched its own connected homes product proposition at the end of 2016.
Sprue's principal products are smoke alarms, CO alarms and accessories. The Group has an extensive portfolio of patented intellectual property in Europe, the US and other selected territories. Products are sold under Sprue's leading brands of FireAngel, FireAngel Pro, FireAngel Spec, AngelEye and FireAngel Connect.
For further product information, please visit: www.sprue.com
This information is provided by RNS
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