...By Muyiwa Aderinto for TDPel Media.
Purplebricks Agrees to Sell Business for £1, Wiping Out Shareholders
Troubled online estate agent Purplebricks has reached an agreement to sell its business and assets for a nominal £1 to a rival company supported by Sir Charles Dunstone, the founder of Carphone Warehouse and TalkTalk.
This deal with online competitor Strike has resulted in a significant drop in Purplebricks’ stock value, causing concerns for shareholders.
Impact on Employees and Leadership Changes:
Under the terms of the deal, Strike will assume Purplebricks’ liabilities and take on the company’s more than 750 employees.
However, the new owner has warned of potential job losses, particularly among field agents and central support teams.
While staff will transfer to Strike, a redundancy program is expected to be launched, though the exact number of affected roles has not been disclosed.
Additionally, Purplebricks’ CEO Helena Marston will resign after the sale, and the rest of the board also plans to step down.
Return to Shareholders and Preservation of the Business:
Purplebricks stated that the proposed sale is expected to offer a small return to shareholders and ensure the preservation of the business and brand.
Paul Pindar, the chairman of Purplebricks, expressed disappointment with the financial outcome but acknowledged that no other proposal offered better returns, funding certainty, and a swift execution.
Background and Challenges Faced by Purplebricks:
Purplebricks had been struggling for the past 18 months, undergoing operational changes, management reshuffles, and facing calls from shareholders to remove the chairman.
In February, the company announced it was up for sale due to higher-than-expected costs in its turnaround plans.
Despite initial success disrupting the estate agency industry since its establishment in 2012, Purplebricks’ share value has plummeted in recent years.
Positive Outlook and Plans for Disruption:
Sir Charles Dunstone, a partner at Strike’s joint major shareholder Freston Ventures, expressed optimism about the deal, highlighting the positive impact it would have on homeowners looking to sell and save money.
He emphasized Purplebricks’ transformational role in reducing estate agency costs and expressed the intention to combine its brand recognition with an even more disruptive business model.
Strike, formerly known as Housesimple, is also backed by investors including Channel 4 Ventures.
Purplebricks’ sale for £1 to Strike represents a significant development in the estate agency industry.
While it marks a challenging outcome for Purplebricks’ shareholders, the deal aims to leverage Purplebricks’ brand recognition and combine it with a disruptive business model.
The focus is on empowering customers and revolutionizing a process that has seen little change for two centuries.