Purplebricks warns over sales as Axel Springer claims 11.5% stake
The German media publisher has seized an 11.5% stake in the firm through a £125 million investment.
Online estate agency Purplebricks has offloaded a significant slice of the group to Axel Springer, and seen its share price plunge after warning over sales.
The German media publisher has seized an 11.5% stake in the firm through a £125 million investment, which includes a £100 million subscription of new shares to help turbo-charge its US expansion.
It means the Die Welt and Business Insider owner would become the fourth largest shareholder behind fund manger Neil Woodford, Purplebricks founder Michael Bruce and Old Mutual, which own 26% and 13.7% and 13.6% respectively.
Despite the announcement, shares were down more than 10% in afternoon trading after Purplebricks said annual revenues would fall short of company forecasts following a financial hit from the Beast from the East.
It said the torrid weather conditions in late February and early March would shave around 5% off its group revenue predictions of £98 million.
Mr Bruce, chief executive of Purplebricks, said the firm was continuing to “push boundaries and challenge conventional thinking”.
He said: “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.”
As part of the move, Adrian Blair, Simon Downing, Mike Wroe and Axel Springer’s Andreas Wiele will join Purplebricks as non-executive directors. Nick Discombe and Will Whitehorn will retire from the board on June 30.
Axel Springer, which has a market capitalisation of more than 7 billion euro (£6.1 billion), already operates a string of property websites including France’s SeLoger and German portals Immowelt and Immoweb.
Mr Wiele 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.”
Purplebricks said it would use £50 million of the subscription proceeds to bolster its US roll out, which launched in September last year.
The group has already opened bases in New York and Los Angeles and has been pushing into San Diego, Sacramento and Fresno.
Similar to the UK and Australia, buyers will be able to arrange showings, submit offers in real time and negotiate sales on properties with the click of a button.