The proposed sale means the company’s cash balance on completion, up to a maximum of £5.5m, will be retained by the company and distributed to shareholders once the transaction is completed.
Following completion of the proposed sale, Helen Marston will resign from her role as CEO, and the company’s board, other than chief financial officer Dominique Highfield, have said that they would step down.
Employees will transfer to Strike, but Purplebricks said it “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”.
Purplebricks launched a formal sales process following a strategic review earlier this year and said earlier this month that a “small number of parties” were in sale discussions.
The firm said that following the proposal from Strike it did not consider other potential offers, as they did not provide sufficient certainty or were deliverable in the timeframe needed to resolve the group’s short-term funding issues.
It continued that the proposal allowed the transaction to conclude in the short term so it could raise a cash balance for distribution to shareholders and protected the company’s business, brand, existing customers in the process of selling their houses and employees.
Purplebricks added that it would offered “greater certainty for funding partners and other supplier relationships”.
The sale is conditional upon the approval of shareholder at the general meeting, which will be held on 2 June.
Strike acquisition is in ‘best interests’ for stakeholders and shareholders
Paul Pindar, chairman of Purplebricks, 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.
“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.”
He added that he was “disappointed with the financial value outcome” both as a shareholder himself and for other shareholders but this proposal offers a “better return for shareholders, with the same certainty of funding and speed of delivery necessary to provide the stability the company needs”.
Pindar said: “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.”
Marston said that when she became CEO 12 months ago her 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,” she continued.
Marston said that 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,” she noted.
Bringing together brands will ‘supercharge’ mission to democratise house selling
Sir Charles Dunstone, partner at Freston Ventures, a joint major shareholder of Strike, said that it was “committed to the online model”.
“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,” he noted.
Dunstone said that bringing together the two brands would “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,” he noted.
