B2C. Axel Springer has more than doubled its stake in the UK’s largest online real estate agent Purplebricks, from 12.4% to 26.6% of the equity, representing an additional investment of €49m. It is buying the shares of former CEO and founder Michael Bruce and his family. Bruce is now no longer a shareholder in the company he launched seven years ago. The share purchase underlines the German publisher’s support for Purplebricks’ distinctive fixed-price online model. One further major shareholder, fund manager Neil Woodford (see Time Out story this week), owns almost 24%. It is widely believed that Springer will soon acquire his stake and, consequently, mount a bid for the whole company.
Axel Springer initially invested in Purplebricks in March 2018 to boost expansion beyond the UK. But that growth has recently been scaled back as the company struggles with falling UK revenues. Shares are currently trading at well below their 2017 peak which once valued the company at £1.4bn. They plunged 40% in February after the company slashed its revenue forecasts, blaming low growth in its fledgling US business and “headwinds” in Australia. It will now concentrate on the UK and Canadian markets and is expected to make revenues of some £145m this year compared with £94m in 2018 and £185m as originally forecast. In 2018, the company made an operating loss of £19.6m.
Purplebricks has tried to do too much too soon with, and the coolly strategic Axel Springer may be the best antidote.
