QXL.com yesterday clawed back from the brink its European expansion plans by confirming that it would, after all, buy German rival Ricardo.de but on different terms.

The UK online auctioneer said it would pay £171m, a reduction of 71% on the originally agreed price of £627m, to reflect an unexpected downturn in revenues and gross auction value at Ricardo.

Analysts had warned that if QXL's deal with Ricardo fell apart it could spell disaster for the company's European growth plans. It would also end its hopes of beating eBay, the US company, and becoming Europe's dominant inter net auction company. Shares in QXL rose to 63p in early trading amid initial relief that the deal would go ahead, but ended the session down 0.5p at 59.75p. Shares in both companies have fallen by some two-thirds since the deal was first announced in May.

Analysts say the merged group will have a lot to prove, not least improving revenues and better gross auction value at Ricardo, which the company warned would be 20% lower in the fourth quarter than it was in the third.

"OK, the price is far lower than previously announced, but with already small revenues down 20% you have to ask what exactly QXL are buying," said one analyst.

QXL insisted that the fall in revenues was temporary, and that Ricardo presented good growth prospects in one of Europe's most important markets. The revised terms of the deal will see QXL give 34 of its shares for each Ricardo share, as opposed to the previously agreed 42.6 shares. Last week QXL said that the deal was being re-examined after new information about Ricardo had come into its possession.

The renegotiation of the merger has cost Ricardo chairman Eckhard Pfeiffer his place on the enlarged board.

QXL said that the former Compaq chief executive and director of General Motors would be replaced by another Ricardo director.