Troubled online estate agent Purplebricks has agreed a deal to sell its business and assets for a nominal £1 to a rival backed by Carphone Warehouse and TalkTalk founder Sir Charles Dunstone. The deal with online competitor Strike will effectively wipe out Purplebricks' shareholders, sending the stock down more than another 40% on Wednesday morning.
Strike will also take on Purplebricks' liabilities under the terms of the deal, but warned over jobs losses among the more than 750 employees at Purplebricks. While staff will transfer to Strike, it plans to launch a redundancy programme, which is expected to impact field agents and central support teams at Purplebricks, but did not provide a figure on how many roles are set to go.
Purplebricks chief executive Helena Marston is also set to resign after the sale completes, while the rest of the board also plan to step down. The proposed sale is expected to make a small return to shareholders and preserve the business and brand, Purplebricks said.
Paul Pindar, chairman of Purplebricks, said: "I am disappointed with the financial value outcome, both as a 5% shareholder myself and for shareholders who have supported the company under my and the board's stewardship. However, there was no other proposal or offer which provided a better return for shareholders, with the same certainty of funding and speed of delivery necessary to provide the stability the company needs."
The sale comes after Purplebricks revealed last week that it was in exclusive talks with Strike over a deal for the business and assets, but that Strike was pulling out of bidding for the whole share capital of the firm. It warned at the time that there would be little return to shareholders under any such deal.
News of the talks followed just a day after Purplebricks alerted that its cash reserves were under threat. The firm has suffered a difficult 18 months, with an overhaul of its operating model, multiple management reshuffles and shareholder calls for the removal of its chairman Mr Pindar.
The group put itself up for sale in February after disclosing its turnaround plans had been costlier than expected and it was set to sink deeper into a loss. Founded in 2012, Purplebricks had a lot of success in its early years, disrupting an old industry.
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In 2017 the company's shares were selling for about £5 each, but their value has now been decimated and were worth less than 1p each at the time of writing. Sir Charles, a partner at Strike's joint major shareholder Freston Ventures, said the deal was a "positive outcome for anyone looking to sell their home and save money doing so".
He said: "Purplebricks has dramatically changed the industry by driving down the cost of estate agency and we aim to combine its significant brand recognition with an even more disruptive business model. In bringing together the two brands, we will supercharge Strike's mission to democratise house selling by empowering customers to have more control over a process that has barely changed for 200 years."
Strike - formerly called Housesimple - is also backed by investors including Channel 4 Ventures.
