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 only £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 “decreasing the worker base” at Purplebricks.
“Whereas it will 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 probably 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 assist and that any staff affected by redundancy will probably be handled pretty and equitably, in keeping 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 “disenchanted” with the worth of the deal, which might lead to Strike assuming most of its liabilities, however mentioned no higher gives emerged throughout 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 disenchanted with the monetary worth end result, 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.
“Nonetheless, there was no different proposal or supply which supplied a greater return for shareholders, with the identical certainty of funding and velocity of supply essential to offer 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 important shareholder in Strike. He was price an estimated £815m in 2022 as his wealth swelled by £40m, in keeping with the Sunday Instances.
The strategic evaluation of Purplebricks kicked off in February – which included an fairness fund elevate – 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 belongings of Boomin, a property portal he based after standing down as chief govt of Purplebricks in 2019. Boomin was compelled into liquidation final yr after failing to safe new funding.
Helena Marston, the chief govt of Purplebricks, mentioned the deal has allowed the corporate to safe a “solvent end result” 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 business 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’ll supercharge Strike’s mission to democratise home promoting by empowering prospects.”
Purplebricks launched in 2014 and obtained early backing from Neil Woodford, the previous star stockpicker. It floated on London’s junior market, Purpose, in December 2015.