21 May 2020 07:00
21 May 2020
STOBART GROUP LIMITED
('Stobart Group' or 'the Company')
Sale of Eddie Stobart and Stobart brands
Stobart Group, the aviation and energy group, announces that its wholly owned subsidiary Stobart Group Brands LLP has sold the Eddie Stobart and Stobart trademarks and designs ("brands") to Eddie Stobart Logistics for a total consideration of £10 million (the "Transaction").
Stobart Group Limited will put forward a resolution at a general meeting of shareholders to change its corporate name prior to 28 February 2021.
Stobart Group Brands LLP ("Stobart Brands") owns the Eddie Stobart and Stobart Group brands and all associated intellectual rights. In February 2014, Stobart Brands entered into an agreement to licence the Eddie Stobart Brand to Eddie Stobart Logistics in consideration of a £13.7 million premium fee as part of the initial partial sale of the Eddie Stobart business. That 15-year licence agreement provided the first six years to 29 February 2020 royalty free.
Post 1 March 2020, a licence fee of £3 million per annum became payable until February 2029. However, that agreement was terminable by Eddie Stobart Logistics on six months' written notice. The annual licence fee was also conditional on Eddie Stobart Logistics achieving certain performance targets. If Eddie Stobart Logistics did not achieve these performance targets in any given year, the £3 million licence fee was to accrue and only become payable at subsequent dates once these performance targets had been achieved.
The sale of the Eddie Stobart and Stobart brands now will result in an immediate cash receipt. It will also have the effect of helping investors and stakeholders to more easily differentiate between Eddie Stobart's logistics business and Stobart Group's aviation and energy businesses through Stobart Group transitioning to a different name.
Terms of the transaction
Stobart Brands has sold the Eddie Stobart and Stobart brands to Eddie Stobart Logistics for a total cash consideration of £10 million to be paid as follows;
(i) £6 million to be paid upon Completion of the transaction;
(ii) £2.5 million to be paid on or before 1 December 2020; and
(iii) £1.5 million to be paid 36 months after the completion of the sale.
The Transaction constitutes a Class 2 transaction for the purposes of the Financial Conduct Authority's Listing Rules.
The value of the gross assets of the Stobart Brands as at 31 August 2019 was £34 million. The profits before tax for Stobart Brands for the year ended 29 February 2019 was £Nil. The cash consideration will be used for general working capital purposes. The fair value of the brand in the consolidated statement of the financial position at 29 February 2020 will be £10 million, reflecting the cash consideration receivable.
Stobart Group will change its name prior to February 2021. However, there are a number of Stobart divisions that will continue to use the brand for up to 36 months after completion and this will be licenced on a royalty free basis from Eddie Stobart Logistics.
Warwick Brady, CEO of Stobart Group, said:
"Stobart Group is proud of the brand it has built over many years. It is an iconic and highly recognisable name, associated with great customer service.
"However, the brand is primarily associated with the highly visible Eddie Stobart lorries. This has often created confusion for investors and other stakeholders between the Eddie Stobart Logistics business operations and Stobart Group's focus on developing a valuable London airport and a high margin energy business.
"By selling the brand now we can realise value for our shareholders and differentiate our businesses, establishing a new name that reflects our future in aviation and energy."
The person responsible for arranging the release of this announcement on behalf of Stobart Group is Louise Brace, Company Secretary.
Enquiries:
Stobart Group Limited C/o Newgate Communications
Charlie Geller, Communications Director
Newgate Communications +44 203 757 3406
Giles Croot +44 203 757 6884
Ian Silvera stobart@newgatecomms.com
Megan Kovach