By Erin Joyce
Web portal-turned-commerce company Yahoo! Inc.
locked in a deal to acquire online recruiter HotJobs
for about $436 million, beating out onetime acquirer TMP Worldwide for the assets.
Yahoo!’s chief executive Terry Semel said the two companies would “form a powerful new force in the recruitment marketplace and be a valuable source for employers, recruiters and job seekers worldwide.”
The Sunnyvale, Calif.-based Yahoo! said it would pay the New York-based HotJobs $10.50 per share in an agreement that included equal parts cash and stock, and which one-upped TMP Worldwide’s
existing deal with HotJobs.
TMP of New York, the parent company of number one recruiting site Monster.com, had originally agreed to acquire HotJobs last summer in an all-stock deal valued at $460 million.
But as the tech sell-off continued, dampened by sluggish economic conditions, TMP’s stock price kept slipping, pulling the value of the deal down to about $366 million. In early December, Yahoo! stepped in with its own offer, about a 6 percent premium over TMP’s.
On Thursday, Investors politely applauded Yahoo!’s winning bid by sending its shares up about 2 percent throughout the day to $17.82 on the Nasdaq. Shares of HotJobs had slipped about the same percentage to $10.38 by late afternoon.
Yahoo!’s winning bid could be just the ticket the company needs as it forges a new direction away from a heavy reliance on consumer-driven advertising dollars.
Throughout the past year, HotJobs has been making inroads in the corporate headhunting arena with its AgencyExchange.com section, a site that targets staffing agencies and corporate hiring managers. It helps the company build the kind of steady revenues that Yahoo! is also looking for with its its e-commerce and subscription-based ambitions.
When it announced the AgencyExchange.com offering last December, HotJobs said it would charge headhunters a $700 per month membership fee to use its searchable directory of corporate candidates.
At the time, a company official called the market for the service “enormous” and noted that rival recruiting site Monster.com takes in about 40 percent of its total revenues from service contracts to professional staffing firms. Within three years, HotJobs was expecting to hit $80 million in revenues on headhunting services alone.
With the acquisition, Yahoo! gains a company already a year into its strategy shift to unsulate itself from the often-fickle consumer market.
Yahoo! picks up some losses too. Although HotJobs got close to Silicon Alley’s dot-com profitability club, it still hadn’t stepped inside.
However, HotJobs’ third quarter net loss of $4 million (10 cents per share) was certainly better than the $12 million loss (33 cents per share), it recorded during the same, year-ago quarter on roughly the same revenues.
Sales for the same period were $27.5 million, a 4.6 percent decrease compared to the third quarter of 2000 when it took in $28.8 million. During the second quarter, HotJobs took in $31.4 million. Overall, HotJobs appears poised to more than better the $96 million it took in during 2000.
Semel said the HotJobs acquisition is consistent with Yahoo!’s strategy of building a diversified global business.
“We expect HotJobs to drive additional revenue for Yahoo! through listing and subscription fees from employers and recruiters. We look forward to working with the HotJobs team to maximize the recruiting opportunity,” he said in a statement.
Dimitri Boylan, chief executive officer of HotJobs, chimed in: “We are very pleased to be joining Yahoo!. We believe this transaction presents great value for our stockholders and is a great opportunity for our employees, customers and job seekers.”
Boylan also thanked TMP for its interest in HotJobs, which announced that in terminating its prior merger agreement with TMP, it would pay out fees of $15 million plus $2 million of expenses.