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 offered to Charles Dunstone-backed rival Strike for £1 with all of its greater than 750 workers put vulnerable 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 may 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 will doubtless contain the entire firm’s workers as quickly as practicable and presumably previous to completion [of the deal],” Purplebricks mentioned.

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

The corporate’s board mentioned the entire 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 gives emerged in the course of the sale course of.

Beneath the phrases of the deal, Purplebricks will use about £5.5m in money it has on its steadiness 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 end result, each as a 5% shareholder myself and for shareholders who’ve supported the corporate underneath my and the board’s stewardship,” the Purplebricks chair, Paul Pindar, mentioned.

“Nevertheless, there was no different proposal or provide which supplied a greater return for shareholders, with the identical certainty of funding and velocity of supply mandatory 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 World 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 “constructive end result” for homebuyers and sellers.

He’s a accomplice at Freston Ventures, the joint primary shareholder in Strike. He was value an estimated £815m in 2022 as his wealth swelled by £40m, in keeping with the Sunday Instances.

The strategic overview of Purplebricks kicked off in February – which included taking a look at 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 government of Purplebricks in 2019. Boomin was pressured into liquidation final 12 months after failing to safe new funding.

Helena Marston, the chief government of Purplebricks, mentioned the deal has allowed the corporate to safe a “solvent end result” that additionally “preserves” its client model title out there. She’s 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 intention to mix its important model recognition with an much more disruptive mannequin.

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

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

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