Monster.com parent company TMP Worldwide (Nasdaq: TMPW)
answered the surprise counter-bid by Yahoo! (Nasdaq: YHOO) for career site HotJobs
(Nasdaq: HOTJ) on Friday by warning that Yahoo's stock is overpriced, making the deal
risky.
Without raising TMP's existing US$415 million
offer for HotJobs, first tendered in early July,
chairman and CEO Andrew J. McKelvey asserted in a letter to HotJobs CEO Dimitri Boylan
that Yahoo's US$436 million stock-and-cash offer is problematic.
"HotJobs' shareholders should take a closer look at, and be concerned about, the
'value' of Yahoo's proposal," McKelvey wrote.
The deal, McKelvey said, is worth "significantly less" after taxes because it comes
partly in cash, while the TMP offer is all stock, and therefore tax-free to
shareholders until they cash out.
Taking Stock
Yahoo's stock price has risen sharply in recent weeks without underlying changes to
the portal's financial performance, McKelvey wrote.
McKelvey referred to a Goldman Sachs report that raised doubts about the recent jump in
Yahoo's stock price, calling it a "significant premium." Goldman Sachs is the investment
bank advising Yahoo! on the HotJobs deal.
"Yahoo! currently trades at a lofty 351 times analysts' consensus 2001 earnings-per-share
estimates," McKelvey wrote. "That's clearly a level that will be extremely difficult to
sustain. On the other hand, TMP has a proven record of generating consistent profit
growth."
Monster has had its own share of more difficult times recently, however, with the
economy and job market having slowed to a crawl. In early October, Maynard,
Massachusetts-based Monster cut about
10 percent of its worldwide workforce.
Regulatory Hurdles
In pitching its unsolicited offer to New York
City-based HotJobs last week, Yahoo! said it could help assure a faster closing.
The U.S. Federal Trade Commission (FTC) has asked for
more information
about the proposed Monster-HotJobs merger.
"Our offer provides HotJobs shareholders with superior value, less regulatory risk,
and faster execution than HotJobs's pending merger with TMP Worldwide," Yahoo! CEO
Terry Semel wrote.
However, McKelvey said the regulatory hurdles are not as high as Yahoo!
makes them out to be.
Claiming Competition
Monster has asserted that it competes against newspaper classifieds and other job
listing sources, not just against other online job boards.
McKelvey cited the recent agreement among the New York Times and the Wall Street Journal
to create online job listings as proof that the merger of Monster and HotJobs would not
create a barrier to entry into the marketplace.
"Yahoo! has tried to create the perception of a regulatory issue where one does not
exist," McKelvey wrote. "We believe that there is no intellectually honest way in which
the FTC would ultimately seek to block our acquisition of HotJobs."
The Unsung Heroes of E-Commerce December 14, 2001
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Related Stories
Yahoo! Makes Competing Bid for HotJobs December 13, 2001
Yahoo's offer to buy HotJobs follows the merger agreement between TMP and HotJobs.
However, that merger is being investigated by U.S. regulators and has yet to close.
Job Site Monster.com Cuts Jobs October 03, 2001
Monster.com's parent lowered its outlook for next year, even with the expectation
that 'fiscal stimuli will create an economic upturn in the second half of 2002.'
Is Monster.com a Monster? July 06, 2001
Monster.com has been smart, buying when the buying is good. Nothing to fear from a
company that's just being smart, is there?
Monster.com Gobbles up HotJobs July 02, 2001
The acquisition of HotJobs caps a three-month run
during which job search site Monster.com and its parent TMP made a number
of purchases domestically and abroad.
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