QXL Ricardo accepts management bid

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The Independent Online

Shares in QXL Ricardo, the internet auction site, shot up more than 25 per cent yesterday as the board accepted a new £10-a-share bid from the management, turning its back on the £8-a-share offer made in December by the Dutch group, Florissant.

The management's bid - which comes several months after it made an initial offer of just £7 a share - could rise to as high as £20 a share. It has said it will pay an extra £10 for each share if its ongoing litigation to regain control of its Polish business is successful.

QXL bought Poland's biggest auction site five years ago, only to discover three years later that new stock, representing about 92 per cent of the business, had been issued without its knowledge or consent.

The management's increased offer - backed by the private equity group, Great Hill Partners - values QXL at about £17m. However, a successful result in its Polish litigation could double the size of the company. Nevertheless, even with the Polish business, QXL remains worth only a fraction of the £2.5bn at which it was valued at the market's peak in 2000.

It remains unclear whether the group will win in its Polish battle. Last October, a Polish court appointed an administrator to the business. But QXL failed to get the administrator removed after complaining that it was not impartial.

QXL's Polish business made profits of almost 10 million zloty (£1.7m) in the eight months to November, according to results cited by the UK management.

Florissant would not concede defeat yesterday in the auction for QXL, saying it was still considering its options and would make another statement in due course. "Shareholders are urged to take no action at this time," it said in a Stock Exchange announcement.

Florissant made its £8-a-share bid for the company towards the end of last year, prompting the QXL board to withdraw its support for the management's £7-a-share offer last month. However, after failing to get a recommendation for its offer, the Dutch group threatened to go hostile. It is now considering whether to push ahead with a hostile bid.

The QXL management's bidding company, Tiger Acquisition Corporation, is being advised by Deloitte Corporate Finance, while Evolution is advising QXL. Hawkpoint Partners and ISB Corporate Finance are advising Florissant.

Shares in QXL closed 27.5 per cent higher at 1,077.5p yesterday, giving the company a market value of £18.3m.

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