Shares in Safestyle UK PLC (LON:SFE) jumped more than 30% after the double-glazing supplier said it had reached a commercial agreement with its co-founder who is now working with a competitor.
Safestyle on Monday said it had entered into a non-compete agreement with co-founder Mitu Misra, who was a party to the dispute with competitor Niamac Developments Ltd, trading as Safesglaze.
READ: Safestyle shares climb as it puts challenging six months and litigation behind it
The deal involves a five-year non-compete agreement and the provision of services by Misra in support of the continued recovery of Safestyle.
In return, Misra will receive 4mln shares and £2.0m cash, subject to the achievement of performance hurdles, Safestyle said. The cash and share payments will only be made in the fourth quarter of 2020 and are based on Misra meeting performance conditions and Safestyle's trading performance in 2019 exceeding existing market expectations.
“The five-year non-compete agreement is likely to halt the momentum of SafeGlaze and could lead to agents and employees returning to Safestyle, in our opinion,” analysts at Liberum said in a note to clients.
“In recognition of improving visibility in Safestyle's recovery, we upgrade our rating to ‘buy’ from ‘hold’ and our price target from 50p to 80p.”
Shares in Safestyle were 32.5% up at 75.0p in early trade.