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QXL cuts Ricardo bid 74%
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August 18, 2000: 10:11 a.m. ET
European Web auction sites agree to altered merger terms after stocks dive
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LONDON (CNNfn) - U.K.-based Web auctioneer QXL.com PLC secured sharply reduced terms for its takeover bid of German competitor Ricardo.de AG on Friday, apparently due to Ricardo's weaker-than-expected revenues.
The revised bid, which has been approved by Ricardo shareholders, is worth roughly £171.2 million ($256.4 million), 74 percent lower than the original value of £663.3 million ($994 million) when the merger was announced in May. Stocks in both firms fell sharply in the wake of the original deal.
QXL, one of Britain's most prominent Web companies, said last week it was evaluating new information provided by Ricardo, throwing the merger into doubt. QXL's volatile stock has lost about two-thirds of its value since the deal was announced.
 "As a result of our recent analysis, we have confirmed our view that the combination of QXL and Ricardo continues to present a strong and competitive business platform from which to achieve both our strategic and financial goals," QXL Chief Executive Jim Rose said.
Simultaneously with the revised bid, Ricardo disclosed that it expects to post weaker results for the fiscal fourth quarter, which ended June 30, compared with third-quarter results. Revenue is expected to fall about 20 percent compared with the third quarter.
"Their performance was obviously weak but not as bad as some had speculated," Donaldson, Lufkin and Jenrette analyst Nick Gregg told Reuters. "Cash consumption is probably going to be lower than we thought -- but they still look like they'll need fresh funding by 2001."�
Under the revised bid, QXL (QXL) will offer Ricardo shareholders 34 QXL shares for each share they own, valuing Ricardo shares at 32.90 euros ($29.90) apiece. That's an 11 percent premium over Ricardo's closing price of 29.70 Thursday on Germany's Neuer Markt. The original deal had called for QXL to offer 42.6 of its shares for each Ricardo share.
 QXL shares rose 2 pence, or 3.4 percent, to 60.50 pence in mid-afternoon trading Friday in London. Ricardo shares were up 6.5 percent to  31.25 in Frankfurt.
QXL.com is trying to establish itself as a European challenger to U.S. Internet auction powerhouse eBay (EBAY: Research, Estimates). QXL operates in 13 European countries. Ebay is the top auction site in Germany, and also has a site in Britain.
Ricardo, which is No. 2 in Germany, also operates in the Netherlands, Switzerland and the U.K.
But some analysts say French rival Ibazar.fr, which claims to be the number one online auction site in France, Italy, Spain, the Netherlands, Belgium and Brazil, could prove a more formidable threat, especially if Ebay were to buy the company. 
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QXL
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