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Monster Out of S&P 500; Could Be a Takeover Target

John Zappe
Dec 16, 2011, 2:17 am ET

With a stock price so low Monster is about to fall out of the S&P 500, there’s some very public speculation that the global employment advertising company could be bought by a private equity fund.

Rumors have periodically made the rounds of a potential or even pending sale — 20 of them since 2006, according to Bloomberg. All have proven false. But now, says the financial news service, financial analysts and some of Monster’s largest shareholders say the time and price may be right for a takeover.

“The valuation is absurdly cheap,” Eric Green, a Philadelphia-based fund manager at Penn Capital, told Bloomberg. With 3.2 million shares of Monster stock, Penn Capital is one of the company’s largest shareholders.

“The stock has been a clear disappointment,” Green is quoted as saying. He suggested a takeover price of $15 a share. That’s a 92 percent premium over Thursday’s closing price of $7.83. “I would love to see someone buy it,” he said.

Monster’s stock price has declined steadily since hitting a 10-year high of $59.28 in May, 2006. In the last 12 months, the stock has been as high as $25.90, reaching there in January, when the economy seemed ready for a hiring surge. Since August, it has been under $10 a share.

The market value of the company is now about $1 billion, $5 billion less than it was worth in 2006. Its 66 percent decline since the start of this year is the largest of any company included in the S&P 500. As a result, Monster is being moved by Standard & Poors to its MidCap 400 after the market closes today.

Part of the reason for the lackluster stock performance is the weak hiring outlook and the global economic climate of the last few years. Another part is the rise of alternative recruiting channels, especially social media, and especially the launch of LinkedIn as a public company. It bears noting that as hot a launch as LinkedIn had, rising almost immediately upon the start of trading to a high of $122.70, it has been under $75 a share since November. Dice Holdings, the other pure play job board, is also off its 12-month high of $18.75, closing Thursday at $8.75. LinkedIn closed at $66.38. CareerBuilder is privately held by a group of newspaper companies with Gannett owning the majority.

“When the employment market recovers, we’re going to see Monster’s revenue recover,” Avondale analyst Jim Janesky told Bloomberg. “If Monster doesn’t earn the value it deserves in the stock market, then there are various other avenues of recognizing value, and one is certainly a merger or an M&A opportunity.”

Monster declined to comment to Bloomberg and didn’t respond to our email asking for comment.

This article is provided for informational purposes only and is not intended to offer specific legal advice. You should consult your legal counsel regarding any threatened or pending litigation.

  1. Michael Goldberg

    That is a shame if it is taken over by Private Equity firms. Over the last 18 months I have noticed significant improvement in Monster especially around their Power Resume Search but in particular their consulting division gets Social Media. A shout out to Christi Carpenter who provided our company with some incredible advice and introduced me to some of the higher end services that Monster offers.

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  4. Gordon Frutiger

    Hmm, let’s see: Monster has an outdated business model, increasingly treat their clients as if they’re trying to emulate Careerbuilder’s client services, continue to partner with mediocre 3rd-part providers then repackage those provider’s products as their own, have wildly over-priced and ineffectual non-core services, and are entirely focused on year-over-year revenue growth at the expense of quality client partnering. Have I messed anything?

    The only surprise here is that someone appears to be shocked that their stock price is not performing.

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