Yahoo to Buy HotJobs as TMP Declines to Sweeten Offer
Thwarting TMP's bid to further consolidate its lead in the online help-wanted classifieds market, the online portal will offer $436 million split equally between cash and stock. With this deal, Yahoo looks to decrease its reliance on fickle advertising revenue.
"We expect HotJobs to drive additional revenue for Yahoo through listing and subscription fees from employers and recruiters," Terry Semel, chairman/CEO of Sunnyvale, CA-based Yahoo, said in a statement.
The deal is expected to close in the first quarter of 2002.
New York-based TMP's original June 29 bid was valued at $460 million. But a tumble in its share price since then lowered the TMP offer to $355 million to $360 million.
The Yahoo bid took advantage of a better-offer clause in the June 29 merger agreement between HotJobs and TMP. In other words, TMP would have to top a rival offer before the acquisition closed.
Yahoo, one of the Web's top portals, on Christmas Eve jumped into the fray with what HotJobs called a "superior proposal."
In a statement released a few hours before Yahoo's, TMP said it had offered HotJobs a "full and fair value for the company."
"While a combination with HotJobs is attractive to us, we do not see a financial or strategic rationale for modifying our bid for the company," Andrew J. McKelvey, chairman/CEO of TMP, said in the statement.
The acquisition would have strengthened TMP's lead in the estimated $1 billion online help-wanted classifieds market. Established in 1967, TMP is the world's largest recruitment and Yellow Pages agency network. Combined with HotJobs, TMP would have had more than 14 million resumes and 650,000 job listings.
TMP's offer provided the "best long-term value for HotJobs shareholders," McKelvey said.
HotJobs' board of directors will now recommend Yahoo's offer to shareholders. HotJobs will pay TMP a $15 million termination fee and a reimbursement of up to $2 million for proven expenses for accountants, financial advisers and lawyers.
The deal's most noticeable downside is a fear of listings overlap. Users might list on HotJobs, Monster.com and Yahoo's own service, Yahoo Careers.
Still, a deal with HotJobs would leverage Yahoo's 80 million active registered user base in an online recruiting market that seems to boom in good times and bad.
Forrester Research, Cambridge, MA, estimates the online market is 10 percent of the overall $10 billion help-wanted classified market. Online classifieds are projected to grow up to 35 percent each year, accounting for $2 billion to $4 billion in 2005, according to the researcher.
Newspapers that rely on job classifieds for a large chunk of their revenue stand to lose the most to sites like Monster.com, Yahoo Careers or HotJobs.
Yahoo's own service is nowhere near the size of HotJobs' or Monster.com's. The Yahoo Careers section lists nearly 2 million resumes. HotJobs has more than 5 million resumes and more than 7,000 employer and recruiter customers who pay to use the service.
It is unknown whether Yahoo Careers would be folded into HotJobs.
Research by Media Metrix claims HotJobs.com, New York, as the No. 1 job board for July, August, September and October. But it faces stiff competition from acknowledged market leader Monster.com, Maynard, MA.
Monster.com claims 29.1 million unique visits in November, citing research from I/PRO. In the same month, it was named the premier provider of career content on Microsoft Corp.'s MSN service. This mirrors a similar, four-year deal with America Online Inc.'s AOL brands worldwide.
Despite the setback with HotJobs, TMP said it would continue to "pursue initiatives and partnerships" to widen its reach in the online careers market.