Strike asks for extension to buy Purplebricks’ business

Online agent rival to Purplebricks, Strike, has been granted a ‘short period’ extension to make a bid for the business and assets of Purplebricks.

The proceeds of such a sale would go back to the Purplebricks shareholders, according to the statement from the Stock Exchange.

Crucially, this would not be an offer for the company, which yesterday saw its share price drop to virtually junk status.

Strike was subject to a ‘put up or shut up’ order to make an offer by a deadline of 5pm today – or request an extension.

Strike was subject to a ‘put up or shut up’ order to make an offer by a deadline of 5pm today – or request an extension.”

The statement from the Stock Exchange said, “Purplebricks Group plc (AIM: PURP) confirms that it has granted Strike Limited (“Strike”) a short period of exclusivity in order to negotiate a possible sale of the business and assets of Purplebricks (the “Business and Assets Sale”). The exclusivity arrangement entered into does not include provision for a break fee or inducement fee and does not restrict Purplebricks from pursuing an offer for the Company. The Formal Sale Process announced on 1 March 2023 remains ongoing.

The Business and Assets Sale, if it is concluded, would be subject to approval by Purplebricks shareholders at a general meeting. Should the Business and Assets Sale be concluded, Purplebricks’ intention would be to return the net cash proceeds to shareholders, with such return likely to be at a level below the current share price. There can be no certainty that the Business and Assets Sale will be concluded, nor as to the terms of such a transaction.“

Minutes before the deadline, Strike issued a ‘No Intention To Bid’ statement via the Stock Exchange, confirming they had no interest in acquiring the company itself, but stated its interest in the business and assets of Purplebricks. The Neg asked Strike’s chief, Sam Mitchell, to comment, but he declined.

Further twist

But it is not guaranteed that the direction of travel will be for sale of the business and assets. Yesterday, two of Purplebricks’ major shareholders, Inflection Point Investments (4.78%) and Momentum Global Investment Management (7.18%), sold all of their shares, amounting to just under 12% of the business. On its current market capitalisation of £5.92m, that would equate to around £700,000.

It is clear why they bailed out, but the burning question is ‘who bought the shares’? And why.

The period of exclusivity applies only to the purchase of assets and business, so allows another player to step in with an offer for the company.