Japanese manufacturer Seiko Instruments Inc (SII) supplies inkjet systems for a variety of end uses including wide-format graphics, coding and marking, textiles, and the ceramics and building markets.

Cambridge-headquartered Xaar has agreed a deal whereby Seiko Instruments will upgrade its existing licensing arrangement, at the same time replacing future royalty obligations, in exchange for ¥2.98bn – the equivalent of around £20m at current exchange rates.

The money will be paid in two tranches, by the end of June 2018.

Xaar chief executive Doug Edwards told PrintWeek that he could not make any further comment about the details of the deal at this time. "What I can say is that it’s very good news and generates value for us and our shareholders," he said.

Seiko Instruments is a long-standing Xaar client.

It’s not yet clear how the £20m will be accounted for in Xaar’s 2018 results. The firm is just approaching its 2017 financial year-end, where supply chain issues have impacted its second-half results.

Xaar’s 2016 results were boosted by a £7m royalty adjustment that resulted from a royalties audit involving the group’s two legacy licensee agreements.

Xaar shares jumped from 378p to 391p after the announcement (year high: 508p, low: 325p).