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Sprue Aegis gets warm response to BRK deal extension

Last updated: 03:42 21 Mar 2014 EDT, First published: 04:42 21 Mar 2014 EDT

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Profit forecasts have been increased for home safety product group Sprue Aegis (LON:SPRP) after it extended its exclusive distribution agreement with BRK/Jarden for another three years on better terms.

The extension, from April 2015, will see a phased reduction in the annual fee down from the £4.2m payable currently to £3.5mln in 2015, £3.0mln in 2016 and £2.9mln in 2017.

ISDX-listed Sprue also secured improved terms on the products Jarden makes for including better credit terms, removal of exchange rate risk and fixed prices for two years. 

It has also retained the exclusive rights to distribute the products and brands of BRK Brands - First Alert, BRK and Dicon - throughout Europe.   

Graham Whitworth, Sprue’s chairman and group chief executive, said: “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."

On the back of it and the improved visibility, house broker Westhouse raised its adjusted profit forecast for 2015 to £10.9mln (from £10.2mln) and its price target to 250p from 170p. Westhouse has maintained its ‘buy’ recommendation. 


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