Troubled online agents Purplebricks, which was worth £1.4bn at the height of its success, has been bought out by its rival for just £1.
Fellow property portal Strike has bought Purplebricks by assuming “substantially all” of the company’s debts for a token consideration of £1.
Purplebricks will retain a maximum of £5.5m of its cash reserves after the deal completes, with the proceeds to be returned to shareholders.
The rescue deal comes after Purplebricks shares hit a record low of 1p last week, when it revealed that Strike had pulled out of a formal sale process.
The troubled estate agent put itself up for sale in February. It later sped up the sale process despite a lack of interest at the board’s intended price, after it warned it could run out of cash if a deal was not agreed.
Helena Marston, chief executive at Purplebricks, welcomed a “solvent outcome” for the online-only agency after it had endured a “challenging and uncertain time”.
She added: “My view and that of the board in February was that we would be better placed to realise our full potential under private ownership.
“Taking the actions we did has allowed us to secure a solvent outcome, which protects the future of the business and the Purplebricks consumer-driven brand, alongside the benefits of further investment.”
Chairman Paul Pindar said he was “disappointed” at the lack of value offered, but that there was no alternative but to accept the deal.
Sir Charles Dunstone, partner at Freston Ventures, a joint major shareholder of Strike, said: “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.”
Earlier this month, Purplebricks warned investors that it would soon run out of cash, as a falling number of properties on its books meant earnings and revenue for the year were looking weaker than anticipated.
Purplebricks’ results showed that instructions fell by nearly half in the last three months of 2022, dropping from 10,964 a year earlier to just 5,672.
The group put itself up for sale after revealing its turnaround plans had been costlier than expected and that losses were expected to deepen. At the time Ms Marston said the company’s potential was “not reflected in our market valuation”.
In 2017, the company’s shares were selling for about £5 each, valuing it at around £1.4bn. A floundering international expansion and an error around lettings laws, which cost the company £9m, led to its shares plummeting in subsequent years, falling 94pc in the past 12 months alone.