Purplebricks Strikes out

Russell Quirk

In recent days Purplebricks has announced to the Stock Exchange that it has been approached by its rival, Strike, in a takeover bid.

Curious? Not really.

London Stock Exchange rules dictate that any approach by a potential buyer has to be announced publicly because of sensitivities around rumour and conjecture and resulting share price movements. The rules also state that a ‘put up or shut up’ deadline is imposed in order to flush out those approaches that are spurious.

So, is Strike just window shopping here? I rather think so.

It’s tempting when a big name is in trouble to make it roll over so that you can look at its belly. The internal workings of that organisation are then laid bare for the competitor to snoop upon in order to gain knowledge. Legal industrial espionage of sorts.

And of course there’s the PR advantage in making it appear that as a potential offeror you are bigger and more of a player than you really are. There may or may not have been a similar situation when the Daily Mail once reported that Emoov was considering the purchase of Countrywide PLC, a total fantasy but it was great press nonetheless.

Strike do have backers with deep pockets therefore it’s not beyond the realms of possibility that lead investor Charles Dunstone could fund a takeover of Purplebricks – he can definitely afford it given his net worth of $1bn or so, according to Forbes.

But are fools and their money easily parted? Well I’d consider so far Dunstone and his colleagues would seem to fall into that category where Strike is concerned, this after all, a company once known as ‘being simple’ and that amassed losses of £38.8m up to March 2019 and then decided to double-down on crazy and ‘sell’ their services for free. The result? A further loss of £15m in 2020 and 2021 plus whatever is to come when their 2022 accounts are filed soon.

So let’s call it a round loss of £60 million so far. Blimey, the fateful Emoov project didn’t lose anything like that much – albeit at least we knew when to give up eventually.

£60m to a billionaire isn’t much I suppose. It’s the equivalent of the average UK earner blowing £1500. Yet this will pale into significance if the Purplebricks business is purchased and a ‘Strike philosophy’ applied to it given that it’ll take £25 million to buy the thing and a huge chunk of cash to then run it. Strike’s current losses of £8m a year plus Purplebricks’ current losses at £20m a year makes any proposed deal look like nothing less than a financial death wish, in fact buying a football club would seem sensible by comparison – and those things are gaping great money pits.

Perhaps pride will prevail and Dunstone will once again double-down on crazy in order to try to turn two hemorrhaging patients into some kind of Frankenstein – or at least a semi-valuable organ donor?

Note that Dunstone’s buddies at Toscafund, the architect of the takeover of his Talk Talk business, know all about such arbitrage tactics with its founder Martin Hughes seldom if ever showing a failure – the master of turning a sow’s ear into a silk purse of sorts. Easyproperty being absorbed into The Guild, now the ‘nurtur’ group, is a great example of this play with its most recent performance showing a profit of £800,000 under Jon Cooke. Given the relationship with Hughes, Dunstone may well seek their advice and be tempted to ‘go large’ by smashing the two onliners together with a view to then floating the resulting entity again later. Mark my words, merging two rivals together is perilous and not least from a culture fit perspective let alone tech, systems, ops, team fit, brand choice and so on.

This is all fascinating stuff yet my belief is that Strike are just flying a kite – they’re merely kicking the tyres and unlikely to be successful in their apparent quest to buy Purplebricks, if they even intend to make an offer at all.

No, Strike and Purplebricks will remain the last surviving runts of the online estate agency litter until they either fold or they realise, as I did, that the stack ‘em high and sell ‘em cheap model of estate agency ‘simply’ does not work. Then they just need to work out what to become instead.

Meantime, reach for the popcorn and enjoy the shenanigans.

Russell Quirk, co-founder of ProperPR, is a regular media commentator on housing and presenter of Money Talk on TalkTV’s YouTube channel



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  1. watchdog13

    My goodness!!!! I find myself agreeing with RQ. I need to lie down.

    1. Retiredandrelaxed

      My thoughts too!


  2. Simon Bradbury

    An excellent analysis Mr Q!

  3. patrickjfoy@foywilliams.com

    I agree with everything you say Russell . However , regardless of what happens to these online agents , they have done irreparable damage to our proffesion . They have instigated a race to the bottom in terms of both service and fees . The vendors out there have now got the expectation of ridiculously low fees . You just can’t afford to compete .


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