Yahoo To Scoop Up HotJobsYahoo To Scoop Up HotJobs
Responding to an ultimatum that it match a competitive offer, TMP Worldwide decides not to beef up its proposal to acquire online job site HotJobs.com, opening the door for Yahoo.
December 27, 2001
Yahoo Inc. is about to enter the online recruiting market. HotJobs.com Ltd. on Thursday chose the portal's $436 million acquisition bid over a previous overture from TMP Worldwide Inc., parent of HotJobs rival Monster.com. Responding to a HotJobs ultimatum earlier this week specifying that it raise its original offer or risk losing the deal, TMP said Thursday it would not modify the terms of the all-stock offer it tendered in June, clearing the way for Yahoo's proposal of cash and stock.
In a statement issued Thursday morning, TMP said it offered fair value and thus did not have a financial or strategic reason to sweeten its original proposal to acquire HotJobs. Yahoo execs said in a statement that the addition of HotJobs to the Yahoo Careers portal will add 5 million resum?s to its existing database of 2 million, and that HotJobs should generate additional revenue for Yahoo through listing and subscription fees from employers and recruiters. The deal is a boost to both HotJobs and Yahoo, says Delphi Group senior analyst Charles H. Luce. "It brings a greatly increased source of site traffic and fresh resum?s to HotJobs, and it adds a whole new angle to Yahoo's business model," he says. "Providing site visitors with recruiting technology is a great way to keep people around."But David Zale, director of research for Sands Brothers, says HotJobs' financial situation precludes it from delivering the quick revenue infusion Yahoo needs. "HotJobs is losing money, and sooner or later they will run out of money," he says. "The only way [HotJobs] can see improvement is through synergies in their operations with Yahoo, such as cutting overhead." Yahoo entered the bidding for HotJobs earlier this month when it offered the job site a deal valued at $10.50 per share, or $436 million. Yahoo's offer overshadowed the all-stock proposal TMP made to HotJobs, a proposal that dropped in value from $460 million to about $355 million as TMP's stock price fell. On Christmas Eve, HotJobs declared Yahoo's proposal "superior" and issued its ultimatum to TMP. Because refusing to increase its offer caused it to lose the bidding war to Yahoo, TMP is entitled to a $15 million termination fee and reimbursement of up to $2 million in documented expenses from HotJobs. Yahoo's acquisition of HotJobs is expected to close in the first quarter of next year, pending shareholder and regulatory approval.
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