Sprue Aegis shares fall 28% as distribution termination heats up

Shares in home safety product manufacturer Sprue Aegis plummeted by almost 30% on Friday as the company’s distribution agreement with Newell Brands has soured.

Sprue Aegis received a written notice from Newell’s company BRK Brands on 22 March which alleged that Aegis had breached provisions of the distribution agreement relating to its use of BRK trademarks.

The letter from BRK Brands continued to state that the breach is "not curable" and that following immediate termination of the agreement it would not purchase any stocks of unsold products.

BRK Brands has been one of Sprue Aegis’ main distribution outlets but BRK issued a 12 month notice of the agreement’s termination on 31 March 2017, which BRK has evidently brought forward due to the alleged breach of terms.

Sprue Aegis is seeking legal advice concerning the termination and allegations against it.

The termination has resulted in the delay of Sprue Aegis’ release of its final results for the year ended 31 December, which will no longer be provided this month.

The smoke detector manufacturer did note, however, that it will no longer be obligated to pay a fixed annual distribution fee of £2.9m to BRK Brands and that it will now carry out a valuation assessment of the stocks that BRK has declined to purchase.

As of 1245 GMT, Sprue Aegis’ shares were down 28.97% at 134.95p.