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PurpleBricks Group plc on 17 February 2023 that it has launched a formal sale process (FSP) following significant losses which exceeded their predictions. Though they have outlined a proactive approach to making operational changes in the interest of the business’ long-term health, the company is suffering from lower instruction levels and is subsequently revising its expectations for the full financial year performance. Having already written off £1.2m, the board has announced that it is expecting revenue for the 2023 financial year to be somewhere between £60m and £65m, with an adjusted EBITDA loss of between £15m and £20m. 

The board is carrying out a strategic review of the company with the aim of delivering maximum value for shareholders, noting that the ‘potential of the group may be better realised under an alternative ownership structure’. The board has therefore launched a FSP as it believes that PurpleBricks’ business and brand has significant value. Under the UK Takeover Code, an offer period has now commenced, although the company has said that it is not yet in talks with any potential offeror and the ‘outcome of the strategic review may or may not result in a sale of the company or some or all of the Group’s business and assets.’ PurpleBricks still has an optimistic outlook and is expecting positive cash generation in early 2024. They credit this assessment to the brand value that they have built over the last decade, in combination with the ‘positive operational changes made for the long-term health of the business’ and their strategic review. CEO Helena Marston has commented:

Marston’s assessment of their current market valuation being bleak is accurate, as PurpleBricks’ shares peaked in value in mid-2017 and have since fallen more than 98%. On 17 February 2023 following the announcement, shares plunged a further 20% to 8 pence. Furthermore, in December 2022 there were reports of a cost-cutting programme which could see more than 10% of the workforce cut, but the company is yet to confirm this.

It remains to be seen what interest will arise following the formal sale process announcement, Market Tracker will continue to monitor the transaction as it develops.