Purplebricks is to enter the the Canadian market with the acquisition of an online firm it describes as similar to itself.
The deal values DuProprio/ComFree at around £29.3m, and follows a £125m investment from German media giant Axel Springer.
DPCF owns and operates one of Canada’s leading “commission-free real estate service networks as an online offering with similar aspects to Purplebricks”, it was announced to the London stock exchange this morning.
DPFC is said to have built a profitable 20.1% market share of the estate agency market in Quebec and has recently launched into Ontario and Western Canada. Last year, it had revenues of £26.2m, with EBITDA of £2.4m. Purplebricks said DPCS’s profits would have been higher had it not been for its investment in territorial expansion.
Purplebricks said this morning that the acquisition of PFC presents an attractive opportunity to grow market share quickly in Canada. It will spend another £15m in expanding DPCF across Canada.
Purplebricks said its entry into the Canadian market will not take up “excessive Purplebricks management time” as it will be retaining the existing DPCF management team, headed by Marco Dodier. Purplebricks said: “This is a low risk entry into an attractive market, via a profitable business and proven management team.”
Michael Bruce, CEO of Purplebricks, said: “We are excited about working with DPCF’s exceptionally strong management team to leverage the significant opportunities for growth in the Canadian market. ”
“Expanding the geographical footprint across Canada and building the company’s buy-side offering provides the potential to transform the size of the DPCF business and consolidate its market leadership.
“This acquisition follows the £125m strategic investment by Axel Springer in Purplebricks for the aim of accelerating global growth. Through applying the appropriate funding and support we believe we can deliver real value enhancement for our shareholders.”
On Thursday this week, Purplebricks is due to announce its latest annual results. There is speculation that losses will widen to £22m, but that revenue will double to £93.7m.
Comments (29)
Stock market doesn’t look impressed
PB have been great at getting High Street agents to up their game and think of alternative ways to market their business and offer alternative fee models.
Keep going lads and lasses! You can survive!!
Having said that, one does also have to admire the gumption of the chuckle brothers in pulling off all that they have done, misleading adverts and all.
As one entrepreneur once said to me – “It is better to take action and seek forgiveness afterwards, than it is to ask permission beforehand”!
…and so the Great South Sea Bubble 21st century equivalent rolls on….buy into it with eyes wide shut. My money is on PB’s US adventure to be the eventual downfall of this lot….How they can continue to get away with thoroughly misleading advertising in this country beats me. But then what’s the point of the ASA if it doesn’t have the teeth to impose its will. At least in the States, if you get it wrong you lose big-time (vis the billions in fines levied on the banks). Watch this space….
This disastrous service provider is a joke.
8 days into an agreed offer and they still have not confirmed chain details for one of their clients.
Hang your heads in shame PB.
Now taking your miserable service to another country – in fact take it all and get out of the UK please.
22 million pounds lost in a year.
The only way PB, Quirk or any of the others will ever be a truly profitable / successful business is if they become the Amazon of the property world.
The first and only place you visit for your property needs. Be it a buyer, seller, renter, mortgage or legals. – Given corporate agents have been trying this for 30 odd years and at best the largest has just 7% market share. It is an almost impossible task.
No doubt the major shareholders will become very rich, yes it will create some jobs, but just look back to the dot com bubble, so many businesses built on PB’s ideas that were billion pound companies that went pop. Investors will one day see through the smoke and mirrors and stop investing.
I looked at the patch i cover, PB have just 20 properties for sale and only 2 sale agreed (highly populated area, sought after locations). The public have not taken to them. Their repeat business will be almost zero (if they are still around when the sellers move again).
We all know this, we just need to keep doing what we are doing and they will disappear.
The Canadian market is also going through a correction.
It’s seems to me that DPCF have packaged this well for the sell off. If the management team were really that great, they would be looking to expand themselves.
Still can’t understand how EBITDA can be a useful measure to anyone. Just state what profit or otherwise you made once everything is paid.
I am not an accountant, but i would have thought EBITDA is incredibly useful, it levels the playing field and shows true profit not a fluffed up version.
Hadnt looked at it like that, thanks.
I am a simple soul. My profit is what I have left after everyone is paid.
Probably explains why I am sat in my single office agency and not a boardroom of a multimillion pound listed company!
I think the way to look at EBITA is almost Net profit as oppossed to Gross Profit.
Most of us on here will be working on post EBITA figures (we may not know it).
I bet your single office did not loose 22 million last year and turned a profit 😉
Four of us were watching the World Cup match last night on ITV player when a New PB advert came on claiming they do everything an estate agent does. Afterwards, I asked other people in the room if anyone had picked up that the service had to be paid for whether you sold your property or not. No-one had……..including me.
So did we all just miss it, is this yet another advert not conforming to guidelines, or have they entered the ‘no sale no fee’ market without anyone realising?
The one I’ve just watched online with a puppy in it states the fee is payable regardless of sale.
I heard one on the radio, where the disclaimer at the end is read so quick which I couldn’t make out what was said. I will try and find a link.
Cyberduck
The one I’ve just watched online with a puppy in it states the fee is payable regardless of sale.
Verbally with the ‘same prominence or more’ as everything else that is said?
No. As a sub-text. I try not to watch too many adverts but that appears to be the way things are done in other adverts too.
Makes sense really….The end is nigh in the UK for PB, so if they replicate the “Con” in more Countries job eventually done. The ONLY people the business model is designed to help is the majority shareholders.
Clever really…. A bit like a dodgy Driveway Company… you know the ones who knock on your door… here today gone to the next village tomorrow (or once you’ve paid)
Bad news emanating from Canadian Housing Market .47% of interest only mortgages are looking to reset within 12 months and there is a price correction taking place at the moment
Canadian Gov’t has imposed a 15% tax on foreign buyers .In Toronto Home sales were down 35% in Feb .No surprises in guessing who came out the winner in this deal .The Gov’t has raised policy rates 3 times since last July
“This acquisition follows the £125m strategic investment by Axel Springer in Purplebricks for the aim of accelerating global growth. Through applying the appropriate funding and support we believe we can deliver real value enhancement for our shareholders.”
Suggests to me this was known about when Axel Springer pumped £125M in. I assume they are in for the long term with probably a lot more investment to come.
Cybs
Yes Bricks are lucky to have a major benefactor with long pockets and endless patience unlike CWD .Win,lose or draw ,it’s going to be a long arduous journey before shareholders see any dividends where property markets are on the blink around the globe .
>,it’s going to be a long arduous journey before shareholders see any dividends where property markets are on the blink around the globe
No arguments there and no guarantees either.
I only skimmed through the RNS but DuProprio/ComFree are already making a profit if I’m not mistaken. Not sure about the size of the Canadian market but £29M doesn’t actually sound ridiculous with some of the other valuations.
Hi Cyberduck46
Do you know how much actual profit they make ? I cant get my head round EBITDA.
Thanks
“The management team of DPCF has built up a profitable 20.2% market share of the real estate market in the province of Québec”
So it’s just Québec that’s profitable.
Thanks Cyberduck46
Dont really understand EBITDA but 20% market share is impressive
Cybs
The Canadian Housing market is dire Almost a mini- rerun of 2006 when the teaser rates ended putting homeowners into real time . There have been 3 policy rate increases in 12 months Prices down 10% across the board
New mortgage rules with stress testing for all borrowers not a market where pay up front is going to find any legs
That would explain the price then.
PB looking to the long term then, unless of course Chris Wood and others on here are correct and that £30m has been spent as part of some conspiracy.
I’m assuming though that Alex Springer were party to the decision and actually did some due dilligance before handing over £125m.
Everything is low risk when the £41 million you are investing is someone elses money.
Impressive land grab! But rest assured the management of all these new businesses and International areas will not be easy, despite what Michael Bruce says. The speedy build up still looks like an exit strategy to me, but will satisfy Axel Springer who need clicks globally. Milk the hype (translate that as the emperors new clothes). If they succeed then the disruption has happened until they start pushing up fees to actually make an enduring profit everywhere (that’s the point of call centre businesses) or they hit the wall very hard and it becomes Deadbricks!
New businesses in 3 different time zones and continents, with a very hungry expensive appetite for the spread of their message and growth using old fashioned TV and Radio media…….It’s an understandable move to buy something that is ‘oven ready’ in Canada, but sometimes businesses grow at all cost and then suffer the hangover after. Talking of which, good morning Countrywide…how are you feeling today…..
It’s like the anthill mob from whacky races
“BOSS! BOSS! The latest results are coming out and CityAm says we’ve made an even bigger loss rather than the profits we promised…!”
”OK you’se guys, make with the feet and spend some more of the mugs, er, I mean investors money to divert attention”
Ever more smoke and mirrors from the Chuckle Brothers ……