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.