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Could Monster Be a Takeover Target?

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Dec 19, 2011

Last week, Bloomberg reported that Monster Worldwide Inc. (MWW) is being removed from the S&P 500 after losing almost $5 billion in market value in the last five years. With a stock price low enough to force the world’s largest online-recruiting company 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. According to the Bloomberg article, the company has plunged 66 percent this year, the most in the Standard & Poor’s 500 Index, as American businesses remained reluctant to hire.

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 more than a 92 percent premium over Friday’s closing price of $7.71. “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.

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.

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