Purplebricks’ sale of its Canadian operation for some £35m begs the question - where can it now recoup some of its losses as it remains a UK-only business?
In July 2018 it acquired its Canadian equivalent online agency DuProprio for around £29m and went on to create a UK-style operation, albeit with a different pricing structure for customers.
Now its sale for £35m - to a Canadian financial group called Desjardins - comes after the ignominious collapse of its Australian and US businesses, and marks the end of Purplebricks as an international player.
The sale of Purplebricks’ Canadian activities, announced when the London Stock Exchange closed last evening, gives the struggling hybrid agency a major cash boost, increasing the company’s money at the bank to £66m.
It comes also just as Purplebricks’ founder - Michael Bruce, who left the agency a year ago - has set up his own portal-style operation called Launch B; this has had only limited exposure so far, with few details made public, but it makes much play of its links with Purplebricks.
Purplebricks has had a number of shocks recently.
Firstly its market share has remained stubbornly at between three and five per cent, depending which measure and index you choose.
Secondly its high-profile sponsorship of TeamGB for the August 2020 Olympics took a hammering when the Games were postponed for a year.
And thirdly, Andreas Wiele - a key board member who joined Purplebricks in 2018 as a representative of the German-based Axel Springer, one of Europe’s largest digital publishing companies - stood down last month.
Wiele joined as Springer invested some £125m in the company in spring 2018, including a £100m subscription for new shares in order to accelerate the company’s roll-out in the US - one of the agency’s overseas enterprise that quickly ended in failure.
Below you can find the full announcement of the latest Purplebricks sell-off.
"Purplebricks, the leading UK hybrid estate agency business, today announces that it has completed the disposal of its Canadian business, which includes the DuProprio and Purplebricks Canada operations, to the Desjardins Group, a Canadian cooperative financial group, for cash proceeds of $60.5m Canadian Dollars (approximately £35m), subject to minor adjustments for completion working capital and completion debt, and which includes repayment of intra-Group debt owed by PBDP to be repaid to Purplebricks immediately following completion.
"The disposal of PBDP simplifies the Group's operations and fits with its strategy of focusing on its core market in the UK, where there is substantial opportunity to grow its market-leading hybrid model. Following receipt of proceeds, the Group will hold a net cash balance of £66m. The net proceeds will be used to further strengthen the Group's financial position and invest in its UK business.
"The agreement for sale includes customary terms and conditions for a transaction of this nature, including customary representations, warranties and indemnities given by Purplebricks to the Desjardins Group as well as certain restrictive covenants provided by both Purplebricks and the Desjardins Group. Purplebricks will grant PBDP a licence to continue to use the Purplebricks brand in Canada for a transitional period until December 2021.
"PBDP had an adjusted operating loss of £(2.8)m for the 10 months ended 30 April 20191 and the book value of its gross assets as at 31 October 2019 was £11.4m.
"Vic Darvey, Chief Executive Officer commented: 'Over the last 14 months, Purplebricks has reset its strategy to give the Company a strong foundation for the next phase of its growth. The Company's hybrid, digitally enabled model is more relevant than ever and this simplification of the business will allow management to focus its time and the Company's resources on delivering growth in the core UK market. The Board wishes the teams at DuProprio and Purplebricks Canada the very best in their new venture - and I would like to thank them personally for the collaboration and mutual sharing of knowledge and expertise over the last couple of years.'"