International media company Axel Springer has poured £125m into Purplebricks.
The money includes a £100m subscription for new shares which will accelerate Purplebricks’ roll-out in the US and support its entry into new markets. The money will also fund “technological innovation and expand Purplebricks’ service offering”.
In exchange Axel Springer will own approximately 11.5% of Purplebricks’ share capital, subject to relevant approvals.
Purplebricks also announced this morning that it expects its group revenues for the full year to show around 100% growth year on year, despite “some UK underlying softness”.
It said: “Some UK underlying softness and adverse weather in late February and early March has resulted in group revenues for the year being expected to be approximately 5% below company consensus.”
Axel Springer is Europe’s leading digital publisher and has a market capitalisation of €7bn on the Frankfurt Stock Exchange.
It is to make its £125m strategic investment in Purplebricks by subscribing for new ordinary shares of £0.01 each, as well as acquiring existing shares at 360p.
CEO Michael Bruce described the partnership with Axel Springer as ground-breaking.
In this morning’s statement, Purplebricks said: “The board believes that this is a major strategic advance for the company and that Axel Springer’s expertise and funding should enable Purplebricks to achieve its strategic goals and global ambition more quickly and effectively.”
The deal will be put to the AGM on April 18.
Bruce said: “It is fitting that on the cusp of our four year anniversary we continue to push boundaries and challenge conventional thinking.
“The strategic partnership with Axel Springer is ground breaking and will propel Purplebricks further towards our strategic goals and global ambition. We now have the platform, funding and, through Axel Springer’s experience, as well as the appointment of four new leading non-executive directors, the expertise to achieve our vision.
“Purplebricks continues to be a pioneer and a consumer champion, providing customers with a better and more cost effective way to buy, sell and let property through the combination of technology and first class people.
“Our feedback, which has just broken through 40,000 UK reviews on Trustpilot, with an average score of 9.6 out of 10, is further evidence that consumers across countries are embracing change and recognise the benefits we deliver.
“The funds raised will be used to put even more clear blue water between us and our competitors in terms of customer service and bring the Purplebricks offering to new territories.
“We are confident in the future, welcome the endorsement of Axel Springer and look forward to continuing to deliver value for all of our shareholders.”
Dr Andreas Wiele, president of classified media at Axel Springer SE, said: “Under the leadership of its founder Michael Bruce, Purplebricks has created a highly innovative digital real estate platform and has become the clear market leader in the UK in a short space of time.
“For Axel Springer, this minority stake offers the opportunity to participate in an innovative, fast growing business model in new markets.”
Comments (27)
I’m going to reserve judgement on this until “The Oracle” Robert May passes comment. After all, investments of this size are generally made on gut feel and hope. Or, not.
Phew! Realised I misread it. Thought SPRINGETT had made the investment 😉
Not yet!
The drop is Share price is likely due to the revenue warning.. As per my previous comment they do not need to make money.
They do need to continue to grow.
5% less than they said due to snow… Smells like an excuse.
Also yes creation of new share but I think the revenue is the bigger issue.
>Just never makes any money does it.
Only income keeping it afloat is always from investors.
Spin from PB & Spin from Traditional Agents.
The truth lies somewhere in the middle.
Do your own research.
>Entry into new geographic markets
Given that Axel Springer are based in Germany, I wonder if Germany is a market that they’re looking at entering?
Axel Springer’s SP up 1.26% on the news.
“In order to secure a shareholding in Purplebricks of sufficient size, Axel Springer has also agreed the purchase of an aggregate 6,944,444 Ordinary Shares (the “Sale Shares”) at 360 pence per Sale Share, representing an aggregate value of approximately £25 million, from Michael Bruce (Group Chief Executive Officer), William Whitehorn (Non-executive Director) and Kenny Bruce (Global Sales Director). The Share Purchase is conditional on the Subscription becoming unconditional. ”
Surprised we haven’t had the usual comments that accompany Director sales.
“Purplebricks aims to continue to invest in innovation to cement its strong position in traditional and hybrid/online markets. In particular it will seek to develop better, more rapid methods of communication, as well as best in class search functionality, additional advertising and marketing options for sellers and information for customers.
As part of a strategy to build on its current service offering, Purplebricks aims to create longer lifetime relationships with its customers so they stay engaged with the brand for the period between moving into their new home and when they come to sell the property and it will look to engage with more of the buyers who visit the site (over 1 million searches a month in the UK). Alongside this, the Board are exploring ancillary services and additional revenue opportunities which are yet to fully embrace technology as it believes Purplebricks is well placed to provide a superior customer experience, reduce friction in the transaction process and speed up transaction times in these markets.”
Hi Duck I responded to one of you posts the other day but you must have missed it. Here it is
“I dont trust estate agents any more or less than anybody else. I just find it hard to believe that anybody with more than half a brain cell would base investment decisions on this forum and i cant believe you or Dom think that anyone would which makes me wonder why you both defend Purplebricks but no other companies (that I am aware of)?
If you are crusaders for the truth and objectivity in order to inform potential investors I haven’t seen you challenge any of Purplebricks claims or their lack of transparency. Both yourself and Dom seem to be as Pro Purplebricks ad the vast majority of posters are anti. I can see the motivation in the posters being Anti PB but i cant for the life of me understand why you and Dom invest so much time and effort in supporting PB ?”
Well that is certainly the way to bury the bad news in Bighty that they are 5% down on concensus.Serious cash burn with realtors saying no activity reported by 27 of the 41 Bricks experts here are some examples
https://www.realtor.com/realestateagents/Patrick-Etheridge_Irvine_CA_894557_990889718
https://www.realtor.com/realestateagents/Ryan-Rosas_Irvine_CA_1920388_828929708
https://www.realtor.com/realestateagents/Bri-Gabay___2056471_385644497
https://www.realtor.com/realestateagents/William–Murphy_Irvine_CA__557934497
That’s certainly away of burying the bad news back in Blighty 5% down on concensus and cash burn in California
https://www.realtor.com/realestateagents/Gabriel–Gonzalez_Monrovia_CA__898839297
https://www.realtor.com/realestateagents/Emily-Nicole-Wood_Irvine_CA__573694428
https://www.realtor.com/realestateagents/Bethany-A-Londyn_Irvine_CA__437589092
Plenty more !
27 of the 41 Bricks agents report no activity
My money’s on 80+ comments.
And your comment on the story is?
AgentV….I wasn’t going to comment, but alright!
…….I think it’s a bit scarey actually and I have to agree with your earlier comment on collective marketing. Not sure how this can be achieved though. Unfortunately the public don’t get adverts in every Corrie break pushing the merits of the traditional model. That would be nice, but how?
As an aside, a company like Axel Springer do not pump 125 million into a company unless it’s had a very close look at the model, the performance and the future prospects.
Unfortunately the public don’t get adverts in every Corrie break pushing the merits of the traditional model. That would be nice, but how?
It has to be done in a far more efficient and intelligent way….it will come within the next few months, just wait and see.
‘Axel Springer operates leading European real estate portals such as SeLoger, Immowelt and Immoweb‘
See how it works yet?
Sick to the bone thinking how much money has been poured into this. It’s vile.
It does not need to make money, so long as it can show growth in market share the investors will keep injecting the cash.
This is why we need to start countering with Collective Marketing.
Just never makes any money does it.
Only income keeping it afloat is always from investors.
Lets see what that’s done to the share price. Ohhhh…
https://www.google.co.uk/search?q=purplebricks+share+price&rlz=1C1GGRV_enGB750GB750&oq=pur&aqs=chrome.5.69i57j69i61j69i60l2j69i59l2.3605j0j1&sourceid=chrome&ie=UTF-8
I’m reminded of Matthew McConaughey at the beginning of The Wolf Of Wall Street.
Why would the share price dip after this news….does anyone understand, or is it just that these are new shares diluting the overall value of individual ones?
Fugayzi, fugazi. It’s a whazy. It’s a woozie. It’s fairy dust. it doesn’t exist. It’s never landed. It is no matter. It’s not on the elemental chart. It’s not f***ing real.
Think you nailed it!
Seem to remember Dom buying some shares last week. Hope he hasnt been stuck with them……
Unbelievable really. It’s like my local property paper giving me 1 million quid to keep advertising with it. Woodford gameplay got to be found out eventually…no way Bruce brothers could blag this much..they are just his bitchizzzzzz
“In order to secure a shareholding in Purplebricks of sufficient size, Axel Springer has also agreed the purchase of an aggregate 6,944,444 Ordinary Shares (the “Sale Shares”) at 360 pence per Sale Share, representing an aggregate value of approximately £25 million, from Michael Bruce (Group Chief Executive Officer), William Whitehorn (Non-executive Director) and Kenny Bruce (Global Sales Director). The Share Purchase is conditional on the Subscription becoming unconditional.”
At the time of writing, this has shown a loss of just under £10m in today’s trading post announcement for Axel Springer. The Directors will no doubt have a smile at selling at £3.60 per share a big premium to where it is now £2.90. The reason for the fall is not about the directors reducing their stake, it is that the company is issuing another 27.777m shares to raise the £100m for marketing and expenses with £25m being taken out by the Directors, so a total cost of £125m. The issue for the market is (and it is a buried after the news about the Axel Springer) is that they are missing their financial predictions by 5%!
What’s intriguing for me, is that Axel Springer appear to be doing a Zoopla, so will invest in the tech for expansion no doubt into Europe. As a digital publisher, I wonder how big a part in their thinking..of the blue sky variety…is that with this type of growth, PB could be a portal specialising in property matters all over the world?! Its got to make a profit first though and this dilution of £100m pushes that further down the road. Also I wonder when people will ask about the pay and holiday/pension liability for their Uber type employees?!
Agreed the share dilution is the reason for the fall – but why buy shares from Directors when it was likely to be cheaper to buy in the market?
It will be interesting to see if the Bruce brothers re-invest their windfall.
They paid the same price for all shares..if I had to guess, it stopped a further dilution with the extra £25m of shares already in ownership/circulation rather than creating 6m + more. I guess a certain football club in Ireland will now look for a place in the Premiership League with a wealthy backer 🙂