Monster.com Fights Back Against Yahoo! for HotJobs

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."