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 employees 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 hearth 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 want to full this planning and provoke a redundancy session course of, with the corporate’s help, that may probably contain all the firm’s workers as quickly as practicable and probably 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 help and that any workers affected by redundancy might be handled pretty and equitably, according to Strike’s tradition of respect.”
The corporate’s board mentioned all the superior talks held with potential suitors concerned “some proposals to cut back or in any other case change the corporate’s workforce”.
Purplebricks admitted it was “disillusioned” with the worth of the deal, which might end in Strike assuming most of its liabilities, however mentioned no higher affords emerged through the sale course of.
Beneath 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 disillusioned with the monetary worth consequence, 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 offered a greater return for shareholders, with the identical certainty of funding and velocity of supply mandatory to supply the steadiness the corporate wants.”
The corporate’s 5 greatest 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 consequence” for homebuyers and sellers.
He’s a accomplice at Freston Ventures, the joint primary shareholder in Strike. He was price an estimated £815m in 2022 as his wealth swelled by £40m, in response to the Sunday Occasions.
The strategic evaluation 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 government of Purplebricks in 2019. Boomin was compelled 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 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 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, Intention, in December 2015.