Online estate agent Purplebricks sold for £1, putting 750 jobs at risk

Online estate agent Purplebricks sold for £1, putting 750 jobs at risk

Purplebricks, the as soon as high-flying on-line property agent that reached a peak valuation of greater than £1.3bn, has been bought to Charles Dunstone-backed rival Strike for £1 with all of its greater than 750 workers put liable to redundancy.

The corporate, which had threatened to shake up the property market with its low-cost mannequin, put itself up on the market in February after issuing a string of revenue warnings that resulted in its market worth plunging to simply £30m.

Shares in Purplebricks plunged greater than 40% on Wednesday, giving the corporate a market capitalisation of simply over £2m, as the fireplace sale all however worn out shareholders.

As a part of the deal, Strike intends to embark on a cost-cutting drive that features “lowering the worker base” at Purplebricks.

“Whereas this can require complete planning, Strike has indicated it wish to full this planning and provoke a redundancy session course of, with the corporate’s help, that may seemingly contain all the firm’s staff as quickly as practicable and presumably previous to completion [of the deal],” Purplebricks mentioned.

“Strike has nevertheless assured the board that its agency intention is to develop the enterprise, which would require continued worker assist and that any staff affected by redundancy will likely be handled pretty and equitably, in step with Strike’s tradition of respect.”

The corporate’s board mentioned all the superior talks held with potential suitors concerned “some proposals to scale back or in any other case change the corporate’s workforce”.

Purplebricks admitted it was “upset” with the worth of the deal, which might end in Strike assuming most of its liabilities, however mentioned no higher provides emerged in the course of the sale course of.

Below the phrases of the deal, Purplebricks will use about £5.5m in money it has on its stability sheet to pay bills and prices not coated by Strike, leaving shareholders round £2m in proceeds from the sale.

“I’m upset with the monetary worth consequence, each as a 5% shareholder myself and for shareholders who’ve supported the corporate beneath my and the board’s stewardship,” the Purplebricks chair, Paul Pindar, mentioned.

“Nevertheless, there was no different proposal or supply which offered a greater return for shareholders, with the identical certainty of funding and pace of supply crucial to supply the soundness the corporate wants.”

The corporate’s 5 largest shareholders are the German writer Axel Springer, which holds a 26.5% stake, JNE Companions (11%), Momentum International Funding Administration (7%), Pindar (5%) and Hargreaves Lansdown Asset Administration (5%).

Dunstone, who based companies together with Carphone Warehouse and TalkTalk, mentioned that the deal represented a “optimistic consequence” for homebuyers and sellers.

He’s a accomplice at Freston Ventures, the joint predominant shareholder in Strike. He was value an estimated £815m in 2022 as his wealth swelled by £40m, in response to the Sunday Occasions.

The strategic evaluate of Purplebricks kicked off in February – which included an fairness fund increase – reportedly sparked curiosity from the corporate’s co-founder Michael Bruce.

Bruce, who co-founded the enterprise with brother Kenny in 2012, presides over the mental property of Boomin, a property portal he based after standing down as chief govt of Purplebricks in 2019. Boomin was compelled into liquidation final 12 months after failing to safe new funding.

Helena Marston, the chief govt of Purplebricks, mentioned the deal has allowed the corporate to safe a “solvent consequence” that additionally “preserves” its shopper model identify out there. She is going to resign after completion of the deal.

Dunstone mentioned: “Purplebricks has dramatically modified the trade by driving down the price of property company [fees] and we purpose to mix its vital model recognition with an much more disruptive mannequin.

“In bringing collectively the 2 manufacturers, we are going to supercharge Strike’s mission to democratise home promoting by empowering clients.”

Purplebricks launched in 2014 and obtained early backing from Neil Woodford, the previous star stockpicker. It floated on London’s junior market, Intention, in December 2015.

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