Having raised $50m from an initial public offering on the Neuer Markt in July, German e-commerce solution vendor Intershop AG is seeking acquisitions, particularly in the US, where it wants to gain greater visibility in the short term, according to CFO and co-founder Wolfried Beeck. The company, which claims to be the largest indigenous internet company in Europe, has already expanded beyond its home town of Jena, in the former East Germany. While another of the three founders, Karsten Schneider, has stayed there to head the professional services division worldwide, Beeck is based in Hamburg, which is the HQ for finance, marketing and sales. The third member of the troika, Stephan Schambach, got arguably the best task of moving to California, where he occupies the post of president and CEO, handling and drumming up more US clients, as well as carrying out strategic activities such as analyzing market trends. Business is already international, with 30% of the company’s business in the last full quarter coming from North America. The remainder was split between Intershop’s largest customer, Deutsche Telekom (28%) and other clients in Europe (including Germany), who were responsible for the rest, Beeck explained. Offices in Australia and Brazil have been also been opened over the last year. The three-year Deutsche Telekom contract was actually signed last year and brings in a total of $5m a year for its duration. It entails Intershop providing the software for Telekom’s planned T- Mart product, whereby it will offer a complete package to companies wanting to run an e-commerce site. The primary use Intershop wants to put the money raised from the IPO to fund acquisitions, particularly in the States, which it sees as the only way to be able to grow fast enough. The US is where the battle to become world leader in e-commerce is being decided, Beeck explained. The company has been helped in this plan by its acceptance by the Neuer Markt, where its share price shot up from the initial DM100 to DM240 on its first day’s trading, and is still hovering around the DM190 mark even now, despite the shock waves from the Asian crisis. Our US competitors have a poorer market capitalization than us, Beeck commented, so we’re well placed to carry out acquisitions. Indeed, the company was almost 50 times oversubscribed for the IPO, but does not want to face a second round of financing now, unless a particularly good potential acquisition crops up, said Beeck. What is perhaps most surprising about Intershop, apart from the fact that Schambach is only 29 years old now, is that it has yet to show a profit: last year it reported a loss of $8m, and expects another $5m for 1998. Revenues, however, are growing in leaps and bounds, and indeed, whatever money, from the cash raised by the IPO, that is not spent gobbling up smaller outfits will be devoted to financing the cashflow it requires to achieve the proposed revenue growth. Whereas last year it had sales of $5.7m, it expects to post $20m and, for 1999, $50m minimum.
