Online estate agency Strike is set to buy AIM-listed rival Purplebricks for just £1.
A statement issued by Purplebricks this morning confirmed “entry into a conditional agreement to effect the transfer of substantially all of its trading business and assets to Strike […] for a consideration of £1 and the assumption of substantially all of the Company’s liabilities.”
Britain’s biggest online estate agency – which was once valued at £1.4bn – formally put itself up for sale on 1st March this year, and entered into an exclusivity period with Strike last week, during which terms were negotiated.
The sale is “in the best interests of stakeholders”, says Purplebricks Chair Paul Pindar, although he admitted to being “disappointed” with the meagre valuation.
A “significant number of potential offerors” were considered, but nothing that matched Strike’s “certainty of funding and speed of delivery.”
The deal is conditional upon the approval of Purplebricks’ shareholders at a General Meeting on 2nd June. Several major stakeholders have already given their green light.
If it all goes ahead, Purplebricks will delist from the AIM stock exchange and become a new private company called Bricks Newco Limited.
CEO Helena Marston will resign on completion of the sale, and everyone on the Board except CFO Dominique Highfield have also signalled intentions to step down. All other PB employees will transfer to Strike – although the management warns that “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.”
Originally called HouseSimple, Strike was set up in 2007; it rebranded in 2020, and secured £11mn investment from big-league investors including including Channel 4 Ventures and Direct Line founder Sir Peter Wood the following year. It’s been run by CEO Sam Mitchell for the last five years; Mitchell used to be Head of Lettings at Rightmove, having previously done a brief spell as UK CEO of Sotheby’s International Realty.
Major Strike shareholder Sir Charles Dunstone (founder of Carphone Warehouse) says the business “remains committed to the online model” as it acquires Purplebricks.
Paul Pindar, Chairman of Purplebricks: “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. This conclusion has been informed by the Strategic Review in which all options, including an equity fund raise, have been considered and an extensive Formal Sale Process, which involved inbound and outbound approaches from and to interested parties within and outside of the industry. 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.
“On behalf of the entire Board I would like to thank Helena for her leadership of the business through the most challenging of times and wish her the very best for the future. She has implemented a difficult but necessary change agenda over the last 12 months which has laid the foundations for a more secure future.”
Helena Marston, CEO of Purplebricks: “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 relationship which lets us provide pay later solution.
“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, Freston Ventures (Joint Major Shareholder of Strike): “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.
“At Freston Ventures we are focused on building household brands that are trusted by consumers across the UK. We believe there is a better way to sell your house and through this deal, we are developing the market-leading brand to deliver it.”
