UK's luxury brand Burberry Group Plc (BRBY.L, BURBY.PK) said Tuesday it continues the talks with its exclusive worldwide licensee for fragrance and beauty products Interparfums SA after serving a notice to terminate the agreement by December 31. Upon the planned buy out of license, Burberry would pay approximately 181 million euros in cash to the French fragrance firm. The shares of InterParfums declined around 8 percent in the morning trade in Paris.
Burberry and Interparfums have been engaged in discussions since December last year regarding the potential establishment of a new operating model for the Burberry fragrance and beauty business.
"While these discussions continue, their outcome is uncertain," the company said in its statement. According to Burberry, the notice of termination was served to maintain flexibility in pursuing its objective to develop fully this business in the future.
Burberry said it will provide further information in due course.
In a statement, Interparfums said both companies have reached an agreement on certain main terms and conditions, but important points remain to be finalized.
The two parties are continuing their discussions in an effort to reach a new comprehensive agreement. If no new such agreement is reached, then the contract will end on December 31.
Interparfums Chief Executive Officer Philippe Benacin said, "Discussions longer and more complex than expected have naturally led Burberry to exercise its option to buy out the license agreement before the July 31 deadline to ensure its ability to benefit from all possible alternatives. On our side, we have largely anticipated the consequences of this partnership being extended or not. For that reason, we are today particularly confident and motivated about the prospects of opening a new page in our history, regardless of the outcome of these discussions."
In London, Burberry shares are currently trading at 1,203 pence, down 4 pence or 0.33 percent.
In Paris, Interparfums shares are at 17.50 euros, down 1.40 euros or 7.41 percent.
For comments and feedback: editorial@rttnews.com