The long-rumored sale of employment publisher Monster could become a reality following news today the company is seeking “strategic alternatives” to improving its shareholder performance.
Speaking at a business conference in Boston Thursday, Monster Chairman and CEO Sal Iannuzzi said the company is weighing “strategic alternatives to increasing shareholder value.” Although Iannuzzi did not specifically say a sale is being considered, he strongly hinted at it when he added that company leaders will “ensure that we extract the maximum amount of shareholder value in any way we can.”
Investors took the hint, bidding up the stock from the day’s opening price of $6.89 a share to $8.01.
Analyst: No deal is imminent
Reuters reported that a Monster spokeswoman declined to expand on Iannuzzi’s comments. Investors evidently anticipate that whatever alternative the board and management eventually come up with, it will be good for the stock price. Options volume on Monster’s stock increased 32 times over an average day.
However, no deal is imminent, analyst James Janesky of Avondale Partners said. “We know of no buyer poised to scoop up MWW.”
Monster’s stock, which sold as high as $18.47 in the last year, has been in decline since late last April. It fell sharply in August and has closed under $10 ever since. Even as Monster has struggled, its competitors in the job board market, while hardly soaring, have done better.
Dice is trading at just over half its late April peak close at $18.33, However, Dice is a much smaller company and specializes in niche employment sites, with the tech site, Dice.com, its largest revenue source.
LnkedIn, which went public in May, and hit a high of $122.70, closed today at $87. The company has been reporting strong financial growth and good profits.
CareerBuilder, the biggest job board operator, is privately held.
Who would buy Monster?
Iannuzzi, according to Reuters, noted the disparity between his company and its competitors. “The stock price is not where it should be,” he said at the conference. “If you compare us to our competition, any company in our space, our multiple is severely below them.”
That’s certainly true for LinkedIn, which trades at almost 800 times earnings. Dice was at nearly 19 times earnings. Monster closed today, after the run-up, at 18.6 times earnings.
If Monster decided to pursue a sale, the big question is who would buy? In years past, media companies were mentioned as likely buyers.Now though, with so many of them struggling just to remain profitable, that seems remote.
Another job board also seems unlikely. Dice isn’t large enough, and CareerBuilder, which has better numbers in several areas than Monster, may not want to buy. Even if it did want to remove its largest competitor, the company would have to convince its media owners — Gannett, Tribune, and McClatchy — to do the deal. Microsoft, which owns a small piece of CareerBuilder, has the financial resources, but may not see the traditional job board business as a growth market.
Still, Monster’s market cap, even with the price jump, is under a billion — less than the company’s 2011 revenue. Of course, the company wouldn’t sell for that; analyst Janesky speculated the price would be between $10 and $13 a share.