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Tuesday, 16 May, 2000, 13:51 GMT 14:51 UK
QXL in German merger

One of the UK's leading internet companies plans to merge with its German rival.

QXL says it plans to merge with rival in an all-share deal to form Europe's largest internet auction company, with 1.7m registered users.

The new company, to be called QXLricardo, will have its headquarters in London and have a market value of $1.7bn.

QXL Chief Executive Jim Rose said Ricardo's leadership of the German market and its operation in Switzerland, where QXL is not present, made the companies a good fit.

Both had similar business models, running business-to-consumer auctions as well as consumer-to-consumer. Both recently starting charging users to auction their goods.

Mr Rose said there would probably be some integration of the two companies' websites after the deal closed around August.

"We'll probably take the best of both," he said, citing Ricardo's real-time auction technology as one feature QXL may add to its sites.

Premium for shareholders

Ricardo shareholders will receive one QXL share for each of their own shares, valuing the German company at about 1.1bn euros ($1bn), and they will end up owning 43.8% of the combined group.

The valuation represents a substantial premium of about 27% over the closing price of Ricardo shares.

QXL shares rose 15p to 195p after the news was announced. They have been trading as high as 555p within the past year.

QXL rose rapidly to become one of the UK's biggest internet successes, but its share price has suffered recently as internet shares went out of fashion.

Threat from eBay

It also faces a threat from larger US rivals like eBay, who are threatening to move into the European market.

In the first quarter of the year, eBay sold $86m worth of goods on its German and UK websites, more than three times the value of sales by QXL and Ricardo.

QXL is valued at about 649m ($967m), while Ricardo is worth about 784 million euros ($712m).

Launched in July 1998, Ricardo has more than 670,000 registered users in Germany, Switzerland and Britain. Its German site auctioned goods worth 48.4m D-marks ($22.6m).

QXL had more than 500,000 registered users at the end of the last year and auctioned goods worth 5.2m ($7.87m).

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