Superdry PLC (LSE:SDRY) shares soared 18% after it inked a £40 million licensing deal with one of India's largest companies that should cement its financial position and pave the way for the international expansion of the UK fashion brand.
The intellectual property (IP) joint venture with Reliance Brands involves transferring Superdry's brand and related trademarks in India, Sri Lanka, and Bangladesh to a newly established entity.
Ownership stakes in this venture will be divided between Reliance Brands UK and Superdry, with the former holding 76% and the latter 24%.
Gross cash proceeds from the transaction for Superdry are anticipated to be approximately £30.4 million, resulting in a net gain of around £28.3 million after accounting for fees and taxes.
An investment of £9.6 million will be made by Superdry into the joint venture, offsetting the £40 million procured from the Indian conglomerate. Net proceeds are slated for strengthening Superdry's balance sheet, increasing liquidity and fulfilling ongoing working capital needs.
Integral to Superdry's Turnaround Plan, this capital influx aims to rejuvenate the brand and streamline operational efficiencies.
At 8.11 am, the stock was changing hands for 51.05p, up 7.85p.