An 11th-hour rival bidder for Purplebricks has withdrawn its takeover approach, claiming the troubled estate agency’s financial condition is “significantly worse than expected”.
It emerged last Friday that investor Lecram – the vehicle of property investor Adam Smith and a major shareholder in Purplebricks – was looking to muscle in with a proposal valuing the firm at around £1.5m, rivalling the agreed acquisition by fellow online estate agent Strike.
But less than five days later, Lecram has pulled its 0.5p-a-share proposal, leaving Strike – backed by Carphone Warehouse and Talktalk founder Sir Charles Dunstone – as the only bidder in the running.
Lecram said: “The reason leading to Lecram’s decision not to proceed is, principally, that the financial condition of Purplebricks was found to be significantly worse than expected.”
Purplebricks said it continues to recommend the bid by Strike, with an investor vote scheduled for 2 June.
Strike pulled out of bidding for the whole share capital of the firm, but has offered a nominal £1 for its business and assets, including staff.
But it has revealed plans to launch a redundancy programme which is expected to impact field agents and central support teams at Purplebricks.
Purplebricks has seen its share price collapse over the past year, losing nearly 95 per cent of its value.
In the middle of 2022 one share was worth nearly 20p. It is now worth less than 1p.
Lecram, which owns a more than five per cent stake in the beleaguered firm, had criticised its leadership before for being “overly optimistic” in its prospects and not acting quickly enough to make improvements and salvage value for shareholders.
It called for the removal of chairman Paul Pindar last year, and the appointment of property industry expert Harry Hill.
Lecram said Strike’s offer is not in the best interests of shareholders and could end up with them receiving “nothing”.
By Holly Williams, Press Association