QXL under the hammer for £12m

QXL Ricardo, the online auctioneer which said earlier this month it was in takeover talks, announced a management buyout of the company yesterday.

Tiger Acquisition, a company formed to make the offer, is offering 700p a share, valuing the group at about £12m.

The cash offer has been recommended by the board of QXL, four of whom will remain as management and part owners of the company should the bid be accepted by shareholders. The bid is backed by Great Hill Partners, the private equity firm who will own 99 per cent of the new company's equity.

Robert Dighero, QXL's finance director, who will remain in his position in the new company, said: "We need to invest more in our marketing and technology to take the company forward and, given our market capitalisation, funding is difficult to raise as a public company. This is an excellent offer, at a premium of more than 100 per cent to the market price before takeover speculation began."

QXL is expected to report its first profit in the first quarter of 2005. Meanwhile, acourt case to win back its Polish business begins on 21 January. If successful, QXL turnover could double overnight. Some market observers believe a victory could boost the company's share price to more than 700p.

One close follower of QXL stock, who declined to be named, said: "Many shareholders have held this stock since the technology boom in 2000, and the fact that this offer represents a decent premium to the recent share price is irrelevant to them.

He added: "They have waited long enough and may want to wait longer. To me this is an opportunistic attempt by management to buy the company cheaply."