EBay, the American online auction group, may be the mystery bidder behind a possible takeover of its smaller UK rival and dot-com survivor QXL Ricardo, which yesterday confirmed it had received a bid approach.

Shares in QXL Ricardo rose 10.6 per cent to £16.70 after the announcement, giving the online auctioneer a capitalisation of £771 million. That is still less than half its £1.7 billion value at the height of the dot-com boom in 2000, when its shares reached £37.

The FTSE 250-listed business said: “The company notes the recent movement in the company’s share price and confirms that it has received a preliminary approach which may or may not lead to an offer being made for the company.”

It is understood eBay, which generated full-year sales of $6 billion (£2.9 billion) and $1.1 billion in profits, would be interested in QXL Ricardo’s Eastern European business. Of particular interest would be its lucrative Polish division, which, until June last year, was the subject of a three-year legal dispute between management.

QXL agreed to pay the Polish division’s management £56 million in shares to buy back the group, which subsequently helped to lift the UK auctioneer’s profits for the year to March 31 by 222 per cent to £9.75 million and sales by 53 per cent to £45.8 million.

In Eastern Europe, QXL’s sales rose by 77 per cent to £32.7 million, and in Western Europe revenue increased by 15 per cent to £13 million.

Yesterday’s announcement of a bid approach is the second time in two years that QXL has been the subject of a possible deal. In 2005, Florissant, the Dutch venture capital group and a QXL shareholder, made a hostile bid for the company. Although the bid did not succeed, Florissant retained a stake in the business.

In June, Florissant and Izaki, a consortium of Israeli investors, sold down their stakes in QXL Ricardo, but Florissant still holds 16.2 per cent of the UK company and the consortium owns 14.47 per cent.

Adrian Kearsey, an analyst for Evolution Securities, said: “EBay is the obvious choice and buying QXL Ricardo would be a strategically important move.”

QXL Ricardo has been building its presence in Eastern Europe, from which it derives three quarters of its revenue, and recently entered into a joint venture to gain access to the Russian market.

It also has market-leading positions in other regions, such as Switzerland, ahead of eBay, which, according to Mr Kearsey, is the second most popular online auction site in the country.

EBay has proved to be willing to make bolt-on acquisitions in Europe to strengthen its market position. It has acquired Marktplaats, the leading classified site in the Netherlands.

QXL Ricardo, which is chaired by Simon Duffy, the former head of NTL, is one of a very few dot-com businesses to have survived the dot-com explosion in the late 1990s and 2000 when online businesses were bought, sold and valued at vast sums despite many having little asset value.

Lastminute.com, another survivor after the internet bubble burst, was sold to Sabre Holdings, which also owns Travelocity.com, for £577 million in May 2005.

EBay declined to comment.

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