By Annie GreenBBC Business Reporter17 May 2023, 13:29 BST
Updated 6 hours ago
image source, Getty Images
Troubled online broker Purplebricks has struck a deal to sell its business and assets to rival Strike for the token sum of £1.
Purplebricks’ goal was to create a cheaper, more flexible real estate agent by charging home sellers a flat rate.
But the British company, once valued at more than $1bn (£800m), put itself up for sale in February.
It said the deal will lead to job cuts and the boss will step down after the sale.
The announcement caused shares to plummet by about 40%.
Over the past 18 months there has been a number of management reshuffles at the company, a restructuring and one of the shareholders has called for the resignation of the chairman, Paul Pindar.
The company revealed in February that it expected to lose between £15 and £20 million this year.
It said last week it was in exclusive talks with Strike.
The £1 sale price is thanks to the company burning through cash, the BBC understands.
The company spends £3 million a month on costs including staffing, hosting and marketing.
Purplebricks has laid off staff in the last 12 months and sales have taken a hit.
But of the more than 750 employees, the BBC understands the company will try to keep many on.
The CEO, Helena Marston, will step down after the sale closes, and a number of directors will also step down.
Mr Pindar said: “I am disappointed with the outcome of the financial value, both as a 5% shareholder myself and for shareholders who have supported the company under my management and board.
“However, there was no other proposal or offering that delivered better returns to shareholders, with the same funding security and speed of delivery needed to provide the stability the company needs.”
The company said the deal would transfer its £33 million liabilities to the new owner.
Purplebricks was founded in 2012 by brothers Michael and Kenny Bruce, who grew up on a council estate in Larne, County Antrim.
The company found early success but has seen its share price drop 98% over the past five years.
In 2017, its shares suffered after a BBC Watchdog investigation into allegations it made misleading claims to customers.
A year later, stockbroker Jefferies said selling with Purplebricks was a “£1,000 coin toss”.
Unlike traditional brokers, the clients had to pay the fee whether or not the property sold, Jefferies said.
Strike is backed by Carphone Warehouse and TalkTalk founder Sir Charles Dunstone – who is a partner at Strike’s joint major shareholder Freston Ventures.
Sir Charles said the deal was “a positive outcome for anyone looking to sell their home”.