Newell Brands terminates Sprue Aegis supply agreements

Sprue Aegis’ distribution, manufacturing and supply agreements with US consumer products firm Newell Brands are to be terminated, but the home safety products developer has also gained contracts with two other companies.

Sprue received 12 months' notice from Newell Brands, to terminate the distribution agreement with BRK Brands Europe, a subsidiary of Newell, dated 10 April 2010 which was extended for a further three years from 1 April 2015, but will now finish on 31 March 2018.

This will end Sprue's obligation to pay the fixed £2.9m BRK annual distribution fee and the right to distribute BRK's products and brands in Europe.

The AIM-listed company's manufacturing and supply agreement with DTL will also terminate on 31 March 2018.

Sprue said that it will continue to buy and source products under both distribution and manufacturing agreements until the date, and honour its contractual commitments.

Newell Brands president Mark Tarchetti 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.”

On the upside, Sprue has gained new manufacturing and supply agreement with US electronics manufacturer Flex to source a range of smoke and heat alarms and accessories from Flex's facility in Tczew, Poland.

The company has also entered into a supply agreement with a manufacturer based in the Far East to buy alternatives to BRK products.

Sprue executive chairman Graham Whitworth said: "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.”

Shares in Sprue Aegis were down 0.58% to 171.50p at 0903 BST.