HotJobs Favoring Yahoo! in Takeover Battle

By Keith Regan,

HotJobs (Nasdaq: HOTJ – news) says a US$436 million takeover offer from Yahoo! (Nasdaq: YHOO – news) is superior to a longstanding bid from parent company TMP Worldwide, and is poised to take the deal unless TMP boosts its own offer.

HotJobs set a deadline of Thursday morning for TMP (Nasdaq: TMPW – news) to sweeten its all-stock offer. TMP had yet to publicly respond to the HotJobs’ announcement as of early Wednesday.

The stock-and-cash bid tendered by Yahoo! through a letter last week was determined to be a better value for HotJobs’ shareholders than a deal first offered by TMP in June, the HotJobs board of directors said in a statement.

Diverging Values

At the time it was first made, the TMP takeover offer was worth $460 million. But as TMP’s stock price has slipped the value of the deal has dipped to around $350 million.

If HotJobs does go with the Yahoo! offer, which would exchange each HotJobs share for $10.50 in cash or the equivalent in Yahoo! stock, it will pay TMP $15 million to terminate the merger and up to $2 million more in legal and consulting costs.

Logical Move?

Yahoo! chief executive officer Terry Semel said the merger of the portal and the job site makes the most sense.

“We believe that the combination of Yahoo! and HotJobs would create a powerful new force in the recruitment marketplace, and would be the best outcome for HotJobs’ consumers, clients and shareholders,” he said. “We look forward to entering into an agreement with HotJobs and consummating a transaction as quickly as possible.”

Semel has cited the potential speed of a Yahoo!-HotJobs merger as a key selling point. The Federal Trade Commission has requested more information on the deal, raising the possibility of further delays, however.

Though it has yet to formally respond to the HotJobs announcement, TMP has indicated that it will not go away without a fight.

In a letter to HotJobs CEO Dmitri Boylan last week, TMP CEO Andrew McKelvey said the Yahoo! deal posed a tax burden for shareholders and was fraught with danger because Yahoo!’s stock price has recently skyrocketed, without a corresponding improvement in the portal’s financial performance.

Super Bowl Redux

HotJobs also said last week that it has purchased advertising time during Super Bowl XXXVI, scheduled for the first weekend in February, marking the fourth straight year the job site has advertised during the most-watched show of the year. has also been a perennial advertiser during the Super Bowl, which saw the number of dot-com advertisers plunge from 17 in 2000 to 3 in 2001. has yet to say whether it will buy advertising time for the February game.

Sales Boost

Meanwhile, Yahoo! delivered some late Christmas news to its shareholders Thursday, saying that sales on its portal had increased 86 percent over 2000 levels, far outpacing even the most aggressive forecasts for online sales growth.

Yahoo! said that its users spent $10.3 billion online during the fourth quarter, and that the busiest shopping day of the holiday season for the second straight year was the second Monday of December.