Purplebricks founder exits business in £44m deal

Purplebricks’ founder Michael Bruce has exited the company as part of a £43.7m share deal with investor Axel Springer.

Bruce stood down as chief executive last month after a period of difficult trading and has now ended his involvement after seven years.

He has sold his 11% stake for £33.5m, with Axel Springer spending a further £10.2m as the investor doubled its stake in the business.

Axel Springer first invested £125m in March 2018 when its shares were trading around 280p.

The 43.7m shares bought today were at £1.00 each, less than two weeks after the stock hit 90p, its lowest point in three years.

The company, which floated in late 2015, had seen its shares touch 500p in July 2017 and was trading near to 400p in May 2018.

Purplebricks shares closed up 4%, at 108p.

Announcing Bruce’s departure last month, the group said it was putting in place major changes following a reduction in its revenue estimates and major underperformance in its international markets.

It became clear in February 2019 that Purplebricks was in difficulty. It warned that revenues would be considerably lower than expected and cut its revenue guidance by £35m to be between £130m-£140m. Shares in Purplebricks crashed 35% on the announcement, cutting £150m off the company’s value.

It has faced hardship in international markets and conceded that it had expanded too rapidly internationally.

Purplebricks entered the Australian market in 2017. It said that market conditions have been “increasingly challenging” and this, combined with some “execution errors” resulted in a lack of progress. It announced that it will be winding down and closing its Australian business.

The company is also planning to scale back the US business, cutting investment in marketing and other overheads.