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Gloucestershire Business News

Sold for a £1: Purplebricks goes for a knockdown price

Purplebricks PLC, once valued at £1.3bn, has been sold to rival firm Strike for just £1 in a deal that sets a question mark over its 750 staff.

Following Punchline's report last week, Charles Dunstone-backed rival Strike moved in on the no-frills estate agent after yesterday's shares plunge of 40% gave the company a market capitalisation of £2m and a fire sale came close to incinerating shareholders.

As part of the deal, Strike has said it will start a cost-cutting drive for "reducing the employee base" at Purplebricks.

Purplebricks said: "While this will require comprehensive planning, Strike has indicated it would like to complete this planning and initiate a redundancy consultation process, with the company's assistance, that would likely involve all of the company's employees as soon as practicable."

The statement added: "Strike has however assured the board that its firm intention is to grow the business, which will require continued employee support and that any employees affected by redundancy will be treated fairly and equitably, consistent with Strike's culture of respect."

Charles Dunstone founded Carphone Warehouse and TalkTalk and is a partner at Strike's joint-main shareholder Freston Venues. In 2022, his personal wealth was reported to be £815m.

Mr Dunstone said: "Purplebricks has dramatically changed the industry and we aim to combine its significant brand recognition with an even more disruptive business model."

Purplebricks was launched in 2012, commencing sales from April 2014, as an online residential agent owned by Michael Bruce, Kenny Bruce and David Shepherd, the company receiving the backing of investors that included venture capital firm DN Capital, Neil Woodford, Paul Pindar, and Errol Damelin. Its aim was to undermine the traditional high-street agent model by offering digital, commission-free, fixed-rate selling, its profit margins enabled by slimmer running costs.

Purplebricks' failure raises a question over future trends in estate agency. Despite current challenges, consumer analysis by TheAdvisory for 2023's market suggests that the average estate agent fee outside London remains at 1.18%, or 1.42% including VAT when working in a sole-agency agreement.

In January, the industry magazine Property Eye reported that Strike, as it adjusted to tougher conditions, was "making substantial job cuts, with a number of positions across the business at risk of redundancy". Strike's latest financial statement for the 12 months to March 2022 showed losses increased to £72,495,160, up from £54,229,520 a year earlier.

Industry reaction on Twitter to the acquisition has been dry. "I normally feel sympathy for companies that struggle as there for the grace of God go any of us," wrote one onlooker. "But I won't lose any sleep over the demise of PB who blatantly misrepresented high street agents and helped cheapen our industry." 

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