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Yahoo makes offer for HotJobs

The Web portal's acquisition offer marks a substantial premium above the job site's recent market value. But TMP Worldwide has a competing bid on the table.

Yahoo said Wednesday that it has made an unsolicited bid for job site HotJobs.com of about $436 million in cash and stock, countering an offer by advertising and marketing company TMP Worldwide.

Under the proposed deal, Yahoo would pay $10.50 for each share of HotJobs common stock, a substantial premium to Wednesday's closing price of $6.47.

"The combination of Yahoo and HotJobs has the potential to create a powerful new force in recruitment, which has been one of the fastest industries to migrate online and is poised to grow substantially over the next several years," Yahoo CEO Terry Semel said in a statement.

The bid received unanimous approval by Yahoo's board of directors. Semel said he hopes to begin merger discussions with HotJobs CEO Dimitri Boylan and that company's board of directors "as soon as possible."

"Our offer provides HotJobs shareholders with superior value, less regulatory risk, and faster execution than HotJobs' pending merger with TMP Worldwide," Semel said.

HotJobs announced late Wednesday that its board of directors had approved merger negotiations but said its merger agreement with TMP remains in effect.

HotJobs said that its board had not changed its recommendation of the TMP deal and gave no assurance that any agreement would emerge from the approved discussions with Yahoo. TMP responded to Yahoo's offer by reaffirming its commitment to buy HotJobs.

Yahoo's last acquisition deal was in June, when it agreed to buy Launch Media for $12 million in cash and stock.

Focus on classifieds
The play for HotJobs comes just weeks after Yahoo announced a commitment to bolster its online classifieds by expanding listings for jobs, cars, homes and personals. At an analyst conference in November, Semel slashed the company's 44 business units to six, carving out listings as one of the handful of remaining categories.

At that time, Semel indicated he also wanted to enhance Yahoo's classified business through acquisitions.

In an offer letter to HotJobs, Semel said the company's bid would pose less

Yahoo's shopping list
For the past several years, the Internet giant has been snapping up companies that focus on services ranging from job search to music to Web hosting.
Date Acquisition Value (millions)
4/1/99 Broadcast.com $5,700
1/28/99 GeoCities $3,560
6/28/00 eGroups $432
5/27/99 Encompass $130
10/8/97 Four11 $92
6/2/99 Online Anywhere $80
6/8/98 ViaWeb $49
10/12/98 Yoyodyne $29.6
6/28/01 Launch Media $12

Source: CNET News.com reports

regulatory risk than its proposed merger with TMP. He also noted that the acquisition price commands a 23 percent premium over TMP's bid, based on "an average implied price of the TMP transaction over the last 30 trading days." In addition, the company said it is prepared to close the deal quickly.

In June, TMP, the owner of No. 1 job site Monster.com, signed a deal to buy HotJobs for about $460 million. But the merger is rumored to be held up because of regulatory concerns from the Federal Trade Commission.

TMP and Monster.com could not immediately be reached for comment.

Monster.com dominates the online job-listings business, which accounts for 50 percent of all online classified sales. Traffic at the TMP subsidiary is nearly triple that of its closest rival, JobsOnline, according to Nielsen/NetRatings.

This month, TMP reported a rise in third-quarter earnings despite the economic downturn, partly because of its jobs site. The company said that although many employers have reduced hiring, it still garners a larger piece of the pie in online employment ads. It makes most of its revenue by collecting fees from employers.

Yahoo had until recently offered classifieds for free, but it began to charge for listings earlier this year as part of an effort to diversify its revenue. In 2000, display advertising accounted for 90 percent of Yahoo's revenue, a number that is expected to drop to 76 percent by the end of the year.

By jump-starting its job listings, the company is hoping to get a bigger piece of a the recruitment classified industry, which is worth about $10 billion to newspapers annually.

Yahoo said it expects roughly $2 billion to $4 billion to be spent in online recruitment classifieds by 2005, an estimated 10 percent of the overall market at that time. In contrast, online display advertising comprises only 2 percent to 3 percent of the traditional ad market.

Online advertising's savior
Classifieds are fast making up a larger proportion of online ad sales. Revenue from online classifieds spiked 176 percent from $205 million in the first six months of 2000 to $564 million for the same period this year, according to industry trade group the Interactive Advertising Bureau (IAB) and consulting firm PricewaterhouseCoopers.

In the same time frame, the overall Internet ad market posted its first decline after years of double- and triple-digit growth. The U.S. market dropped by 7.8 percent to $3.76 billion in the first half of 2001, according to the IAB.

Mainbar: Classifieds a cash cow Yahoo said it is encouraged because classifieds typically lead the economy out of recession, showing double-digit growth rates in the first couple of years coming out of a down economy.

But the Internet bellwether is not the only online giant looking to cash in on this form of advertising. America Online and the Microsoft Network have also staked claims to classifieds by partnering with Monster.com. In November, AOL Europe signed a deal with Monster.com to reach job seekers in Britain, France and Germany.

Yahoo's bid, if successful, would make HotJobs the third-largest acquisition in Yahoo's history.

Bolstered by its soaring share price, the company in 1999 traded billions worth of stock for Internet audio and video carrier Broadcast.com and personal Web page community GeoCities. Since then it has been relatively quiet on the acquisition front, offering just $12 million for Launch Media this year and $432 million in stock for e-mail provider eGroups in June 2000.