Purplebricks sale hanging in the balance
The online agency has warned that at the current time, the transactions being contemplated would be expected to deliver returns to shareholders materially below the Company's current share price.
Purplebricks is still in discussions with prospective buyers of the business but the online agency has warned that any potential deal “would be expected to deliver returns to shareholders materially below the Company’s current share price”.
In a trading update to the City this morning Purplebricks confirmed that “a small number of parties remain in discussions with the Group in relation to the sale of the Company or some or all of the Group’s business and assets”.
But it cautioned, “Negotiations are ongoing, however, at the current time, the transactions being contemplated, if concluded, would be expected to deliver returns to shareholders materially below the Company’s current share price.
NO GUARANTEE
“There can be no guarantee that these negotiations will result in any such transaction, and there can also be no certainty on the timings or level of any return to shareholders.
“Given the expected level of potential returns to shareholders the option of an equity fund raise has been revisited but is still considered to lack the necessary support. The Board with the assistance of its advisers will continue to engage with shareholders to understand their views on the options for the Group.”
Purplebricks told investors that the Group expects to have finished the financial year ended 30 April 2023 (“FY23”) in line with management expectations, as announced on 17 February 2023.
CASH CRISIS
But it said instruction levels did not increase through Q4 of FY23 as previously anticipated and now expects that the previously anticipated “return to cash generation is unlikely”.
Purplebricks says, “The Board believes it is necessary to conclude the Strategic Review and the Formal Sale Process promptly and in a manner that provides more certainty around the Group’s future ownership, that provides the business with access to additional funding and results in a longer term extension to the finance for its pay later offering.
“In the view of the Board, a conclusion to the process is necessary in the interests of shareholder value, and to create greater stability and clarity for the future of the Company, its employees, its funding partners and its customers.”
Fast failing, badly conceived & run, deceptively marketed company seeks rich idiot to throw good money after bad!
So the new CEO who had zero experience, has accelerated the death of the company she was meant to save. Zara my dog realised that after the super heated 2022 market, instructions in 2023 would fall off a cliff. Given Purplebricks has a business model based solely on cash upfront at time of listing, a decreasing rate of new inventory means falling revenue. So Purplebricks cash at bank is dwindling at the very point it wants to get a new buyer. Zara says buying a company that has never made a profit, burns hundreds of millions, and has a flawed business model, especially when interest rates are going skyward and inflation is out of control, is something that only someone with lots of cash who wants a vanity project, that they will quietly close in 18 months when they realise what they bought. If an investor has £30M lying around talk to me and I will show you what an online agency built with 2023 technology would look, feel and taste like. That is Purplebricks problem, old tech and not much of it, and very few humans, so neither amazon or the Connells group.