Sprue is pleased to announce that it has entered into a three year extension to its existing exclusive distribution agreement with BRK Brands and Jarden. The extension, which is on improved terms, comes into effect from 1 April 2015, when the existing distribution agreement expires.
Under the terms of the new agreement, Sprue has retained the exclusive rights to distribute the products and brands of BRK Brands, namely, First Alert, BRK and Dicon throughout Europe. The key terms of the agreement are as follows:
• Annual distribution fee (£4.2m payable currently) to be reduced to £3.5m, £3.0m and £2.9m in calendar years 2015, 2016 and 2017 respectively; and
• Minimum term of three years to 31 March 2018 with twelve months’ notice required by either party to terminate the agreement. Unless terminated, the agreement automatically renews on the same terms for further periods of twelve months.
As part of the negotiations, Sprue has also secured improved manufacturing terms from Detector Technologies Limited (“DTL”), a Jarden company, which supplies Sprue’s own-brand smoke alarms and other associated accessories:
• Improved credit terms equivalent to two months’ purchases;
• Right to source products at a fixed GBP / USD exchange rate of US$ 1.62, removing foreign exchange rate risk on these purchases which are currently in USD; and
• Fixed product prices for two years from 1 January 2014.
Graham Whitworth, Chairman and Group CEO commented:
“We are extremely pleased to have extended our exclusive right to distribute the BRK Brands products in Europe for a further three years from 1 April 2015. This agreement consolidates Sprue’s position as the leading home safety products supplier in Europe and is a good deal for the Company and all stakeholders.”