RealTime IT News

QXL.com Gets ricardo.de at Knockdown Price

[London, ENGLAND] European online auctioneer QXL.com plc announced Friday that ricardo.de AG has agreed to be acquired for a price 74 percent lower than QXL offered just three months ago.

For the past week, QXL has been reconsidering its proposed takeover of the German online auctioneer, in the light of information provided by ricardo.de concerning its current trading and financial performance.

The new deal gives ricardo shareholders 34 QXL shares for each ricardo share, valuing ricardo at around US $257 million. Back in May, QXL was intending to pay a billion dollars for ricardo, but the share price of both companies has since fallen substantially.

Some analysts may even judge the QXL offer to be generous as it values the ricardo shares at 11 percent above their closing price on August 17 2000.

Repeating the same words he used back in May (according to a press statement), Ricardo's Chief Executive Officer Christoph Linkwitz said the merger was "a historical moment for e-commerce in Europe."

The merger -- if it goes ahead this time -- will create QXL ricardo, a company with over two million registered users. Its enlarged size will enable it to compete more effectively in Europe with its chief rival eBay.

One notable absentee following agreement of revised terms is ricardo's Eckhard Pfeiffer who will not be be joining the QXL ricardo board of directors. This appears to be Pfeiffer's own decision as ricardo's majority shareholders can still nominate a second director to the new board.

Friday's announcement finally answers the 0.75 billion dollar question -- namely: what was the information that prompted QXL to reconsider its original offer?

According to a partial disclosure to the press, it was simply the anticipation of weaker fourth quarter results, caused mainly by speeding up its adoption of commission charges. Both revenue and gross auction value were off by 20 percent, said a ricardo statement.

Ironically, during the same quarter, ricardo increased its number of registered members from 0.67 million at the end of March to 0.82 million at the end of June.

With such a huge increase in users, ricardo's dramatic fall in value appears all the more exceptional.