The battle for the European online auction market intensified Tuesday, as Britain’s QXL (Nasdaq: QXLC) announced that it will acquire Germany’s Ricardo.de AG in a stock deal valued at $1 billion (US$).
The merger comes as dominant U.S. online auctioneer eBay (Nasdaq: EBAY) continues its expansion across the continent, threatening QXL and Ricardo.de in their home markets.
“This is a historic moment for e-commerce in Europe,” said Ricardo.de CEO Christopher Linkwitz. “The merger of two public European e-commerce companies of this size creates a very powerful player in Europe.”
Strength in Numbers
If approved by regulators and shareholders, the new company will have 1.3 million members, a market value of $1.7 billion, and 16 Web sites across Europe. QXL currently has 11 Web sites, while Ricardo.de has five.
Ricardo.de shareholders will own about 46 percent of the new company, which will be called QXLricardo Plc and be headquartered in London. It will be listed on the London Stock Exchange and on Nasdaq.
The companies said that QXL Chairman Jonathan Bulkeley and CEO Jim Rose will hold their current positions in QXLricardo Plc.
No Margin for Error
Many analysts say the merger was inevitable, given that eBay has made tremendous inroads in Europe and was likely to squeeze out either Ricardo.de or QXL, or both. Executives for Ricardo.de and QXL have been in merger talks since the beginning of the year, according to reports.
Since gaining a toehold in Europe, eBay has become Germany’s largest auctioneer with nearly 700,000 users and is second only in the UK, where it has about 170,000 users to QXL’s 400,000.
In terms of volume and profitability, eBay is far ahead of Ricardo.de and QXL. eBay sold nearly $87 million worth of goods on its UK and Germany sites in the first quarter, roughly three times as much as QXL and Ricardo.de combined.
The pioneer of Internet auctions, eBay is also the only profitable online auction company. QXL, for example, lost $16 million in the third quarter of this year. Some of the loss can be attributed to its aggressive acquisition pace. QXL bought auction sites in Sweden, Denmark, Norway and Poland in the last year.
Ricardo.de operates auction sites in Germany, the Netherlands, Switzerland and the UK. It has 670,000 registered users.