THE UK's Stobart Group, which owns Dublin-based Stobart Air, has taken more than a £40m (€45m) hit on the value of an agreement it inked in 2014 to sell the Stobart brand name and designs to the Eddie Stobart Logistics company.
It's now offloading the rights to begin a "fresh start" with a new brand.
Stobart Group will get a total of just £10m over the next three years after announcing yesterday that it is selling Stobart brand rights to Eddie Stobart Logistics. That compares to the £50m that Eddie Stobart Logistics had originally agreed to pay for the rights.
The deal will also see the Stobart Group, including embattled Stobart Air, changing its name. Stobart Air operates the Aer Lingus Regional service.
Under the terms of the licence agreement Stobart Group had that allowed Eddie Stobart Logistics to use the Stobart name, the group could have received at least £9m in the next three years in either paid or accrued fees from the logistics firm.
Stobart Group's last annual report notes that the licence agreement it had with Eddie Stobart Logistics allows the latter to use certain Eddie Stobart trademarks and designs for an initial period of 15 years from 2014. Eddie Stobart Logistics hived off from the Stobart Group in 2014.
The agreement also allowed Eddie Stobart Logistics to purchase the trademarks and designs for use in the logistics business for £15m, or to purchase the trademarks and designs for unlimited use for £50m.
Stobart Group will now receive an initial £6m on completion of the sale, while a further £2.5m is to be paid on or before December 1 this year. A final £1.5m payment isn't due until 36 months after the date of completion.
Stobart Group CEO Warwick Brady insisted the Stobart brand is "primarily associated" with the Eddie Stobart trucks that crisscross the UK's motorways. In a circular to staff seen by the Irish Independent, Mr Brady said that this has "often caused confusion" with Stobart Group's aviation, energy and engineering business.
"Given this confusion, we started looking at potential new brand names for the group toward the beginning of this year," he said.
"However, Covid-19 is changing a lot of our thinking around what we say about ourselves and how we plan to work," he added. "Therefore, we decided to accelerate this decision, believing there is an opportunity for a fresh start with a new brand."