QXL, Ricardo auction merger in doubt

QXL.com is rethinking its proposed $300m offer for German online auction firm Ricardo.de after receiving new information from the firm.

The UK-based online auction giant is fighting to head off a determined move into the European marketplace by US auction site eBay, one of the few dotcoms to be in profit.

The market for online auctions is predicted by Forrester Research to be worth $19bn in the US by 2003 and should generate significant revenue in Europe. QXL.com and Ricardo are by far the biggest players in the European market aside from eBay.

QXL.com said in May that it proposed to acquire its German rival to create a firm then valued at $1.4bn, but now worth significantly less after QXL.com's share price fell heavily through the summer. Ricardo.de shareholders are due to receive 42.6 QXL.com shares for every Ricardo.de share.

A QXL spokeswoman said the firm wanted to get the best possible deal for its shareholders and would make further announcements "in a week or so".

Meanwhile, the firm reported a second quarter loss of £15.5m for the three months to 30 June, compared with £28.1m for the first quarter, although that figure contains £17.6m in acquisition and development charges.

Operating loss before exceptional items deepened to £14.1m from £11.2m as revenue fell to £1.9m from £2.2m. QXL.com said the fall in sales was due to its "continued shift towards an agency based model", where the company has no inventory risk or carrying costs.

However, QXL.com said it would bring forward plans to charge its users fees, introducing them in September, six months earlier than planned.

Site members almost doubled over the three months, from 557,000 to 1.1 million, helped by the consolidation of Swedish auction site Bidlet into QXl.com. The firm also signed a deal with web portal Lycos to feature on its hubs in the UK, Germany, France, Italy, Spain and the Netherlands during the period.