Stobart Group, the aviation and energy firm, announced on Thursday that its wholly owned subsidiary Stobart Group Brands LLP has sold the Eddie Stobart and Stobart trademarks and designs to Eddie Stobart Logistics for £10 million.
Stobart Group said it will put forward a resolution at a general meeting of shareholders to change its corporate name prior to February 28, 2021.
Stobart Group shares rose about 5%.
“Stobart Group Brands LLP owns the Eddie Stobart and Stobart Group brands and all associated intellectual rights,” said Stobart Group.
“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.”
Stobart Group CEO Warwick Brady 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.”
Shares of Eddie Stobart Logistics rose about 10% after it issued its own trading update, saying: “The company has also been notified by the Eddie Stobart Group of the following trading update for the period since end November 2019 …
“Following the acquisition by funds managed by DBAY Advisors of a 51% equity interest in the Eddie Stobart Group, the management team led by executive chairman William Stobart has implemented measures to reorganise and streamline the operations and increase utilisation in the property portfolio, which are expected to positively impact the full year results to November 2020.
“The team continues to closely monitor the impact of Coronavirus (COVID-19) on trading.
“While there have been some volume reductions in parts of the business, the Eddie Stobart Group has benefited from its traditional strong exposure to fast-moving consumer and grocery goods, as well as its e-commerce related activities and volumes in these areas remain strong.
“Following the injection of funding by DBAY in December 2019, the Eddie Stobart Group management team believes the group continues to be well funded in this period of uncertainty. “
In the Eddie Stobart Group update, William Stobart said: “The Eddie Stobart brand is an iconic name, linked to our core values, that should be part of the business.
“The acquisition will also deliver significant future cost savings and it will allow us to continue to grow brand awareness throughout the UK and Europe.”