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UK News: Online estate agent Purplebricks sold for £1

Purplebricks, the once high-flying online estate agent that reached a peak valuation of more than £1.3bn, has been sold to Charles Dunstone-backed rival Strike for £1, with all its more than 750 staff put at risk of redundancy.

The company, which had threatened to shake up the property market with its low-cost model, put itself up for sale in February after issuing a string of profit warnings, resulting in its market value plunging to just £30m.

Shares in Purplebricks plunged more than 40% on Wednesday, giving the company a market capitalisation of just over £2m, as the fire sale wiped out shareholders.

As part of the deal, Strike intends to embark on a cost-cutting drive that includes “reducing the employee base” at Purplebricks.

“While this will require comprehensive planning, Strike has indicated it would like to complete this planning and initiate a redundancy consultation process, with the company’s assistance, that would likely involve all of the company’s employees as soon as practicable and possibly before completion [of the deal],” Purplebricks said.

“Strike has, however, assured the board that its firm intention is to grow the business, which will require continued employee support and that any employees affected by redundancy will be treated fairly and equitably, consistent with Strike’s culture of respect.”

The company’s board said all of the advanced talks held with potential suitors involved “some proposals to reduce or otherwise change the company’s workforce”.

Purplebricks admitted it was “disappointed” with the deal’s value, which would result in Strike assuming most of its liabilities, but said no better offers emerged during the sale process.

Under the terms of the deal, Purplebricks will use about £5.5m in cash on its balance sheet to pay expenses and costs not covered by Strike, leaving shareholders around £2m in proceeds from the sale.

“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,” the Purplebricks chair, Paul Pindar, said.

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