Shares in Vita Group Ltd [ASX:VTG] have opened 22.4% higher today in early trade.
What caused the steep rise?
Vita Group and Telstra Corp Ltd [ASX:TLS] have finally reached an agreement. Vita, which owns and operates a number of Telstra retail stores, has finally secured a deal. However, it will come at a cost.
Vita will now be able to operate up to 110 stores. But in exchange, it has forgone some remuneration, the total of which will amount to 7–8%. Additionally, Vita will be allowed to operate a further five stores in two years’ time.
This agreement extends to 30 June, 2023, with annual extensions following. Either party will also need to provide three year’s notice if it wants to pull out.
The deal has finally brought closure and will allow both companies to move forward.
What next for Vita?
Vita can now return its focus to improving the company’s poor performance this year. The full extent of which will be disclosed next Friday, when the company issues its FY17 results.
Vita CEO Maxine Horne seems optimistic that the worst is now behind the company, commenting,
‘With this key milestone achieved, the Vita Team are well positioned to deliver long-term value to our customers, our team members, and of course to Telstra and our shareholders. I’d like to thank our shareholders for bearing with us whilst we completed these important negotiations.’
A key question for investors is whether the market will be as generous next week.
Junior Analyst, Money Morning
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