Purplebricks Group plc is set to be sold to rival online estate agency Strike for just £1.
The business, assets and liabilities of the company, listed on London’s AIM market, are included in the proposed deal which it says “preserves the business and brand for the benefits of its consumer customers, employees, funding partners and other stakeholders”.
The proposed sale is conditional upon the approval of the shareholders at a general meeting on 2nd June 2023.
The company’s cash balance on completion – up to a maximum of £5.5 million, minus certain costs – will be retained to be distributed to shareholders, should the deal be approved.
It brings to a close the company’s strategic review and formal sale process which saw several ‘credible’ offers during several rounds of bidding.
“The board did not consider the other potential offers provided either sufficient certainty or would be deliverable in the timeframe needed to resolve the group’s short-term funding issues,” it stated.
Purplebricks’ agreement with its ‘pay later’ financing provider was close to expiry, while the company’s cash balance continued to decline.
Helena Marston is to resign from her role as CEO, while the rest of the company’s board – other than CFO Dominique Highfield – have indicated their intention to step down following the cancellation of its shares trading on the AIM market.
All other employees will transfer to Strike. “However it is anticipated that there will be reductions in headcount in the short term as part of a wider cost reduction in the business, which are expected to impact on the size of the field teams and certain central functions,” said Purplebricks, which issued a worrying financial update last week.
Paul Pindar, who narrowly avoided removal as chair late last year following a shareholder revolt, said: “It is the unanimous opinion of the board that the proposed sale to Strike is in the best interests of stakeholders and shareholders should vote in favour of the proposed sale.
“All options, including an equity fundraise, have been considered… I am disappointed with the financial value outcome, both as a 5% shareholder myself and for shareholders who have supported the company under my and the board’s stewardship.
“However, there was no other proposal or offer which provided a better return for shareholders, with the same certainty of funding and speed of delivery necessary to provide the stability the company needs.”
Marston added: “When I became CEO 12 months ago, my focus was a wholesale raising of standards within the business and to chart a course towards positive cash generation. This included delivering £21m of cost savings, stabilising lettings, new revenue streams, raising our prices and much improved financial transparency and control.
“We have achieved many of these goals, but my view and that of the board in February was that we would be better placed to realise our full potential under private ownership. However, the strategic review and formal sale process created increased uncertainty in the business resulting in a need to draw this process to conclusion, which has also been accentuated by the timing of expiry of our ‘pay later’ solution relationship.
“Taking the actions we did has allowed us to secure a solvent outcome, which protects the future of the business and the Purplebricks consumer-driven brand, alongside the benefits of further investment. It has been a challenging and uncertain time but the passion and commitment of our people has been tremendous and I sincerely wish everyone the very best for the future.”
Sir Charles Dunstone, partner at Freston Ventures – the joint major shareholder of Strike – commented: “We remain committed to the online model, which offers customers a much better experience at a far lower cost. This is a positive outcome for anyone looking to sell their home and save money doing so.
“Purplebricks has dramatically changed the industry by driving down the cost of estate agency and we aim to combine its significant brand recognition with an even more disruptive business model.
“In bringing together the two brands, we will supercharge Strike’s mission to democratise house selling by empowering customers to have more control over a process that has barely changed for 200 years.”