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Yahoo the victor in HotJobs courtship

The Web portal wants to be a major player in the recruiting game and sees the HotJobs listings as one way to diversify its revenue from advertising.

Yahoo said Thursday that it has entered a definitive agreement to buy HotJobs, declaring victory in a bidding war with Monster.com parent company TMP Worldwide.

Yahoo's announcement came shortly after TMP said it wouldn't raise its offering price for HotJobs. Monday, HotJobs notified TMP that it had 72 hours to match or top Yahoo's unsolicited bid, which is worth about $436 million in cash and stock.

Earlier this month, Sunnyvale, Calif.-based Yahoo countered TMP's bid, arguing that HotJobs' listings could diversify the company's revenue base and "create a powerful new force in recruitment."

The company said it expects the HotJobs deal to close in the first quarter.

Yahoo's offer, which valued HotJobs at $10.50 a share, was well above TMP's offer of $9.22 a share based on TMP's closing price Wednesday. New York-based TMP made the original offer to buy HotJobs in June. The deal was initially valued at $460 million, but the value eroded with TMP's stock price. The TMP-HotJobs engagement was also prolonged by antitrust concerns from regulators.

Despite the decline in the deal's value, TMP said it already offered HotJobs "full and fair value for the company." Yahoo will fund its acquisition with equal parts stock and cash.

"HotJobs bolsters our listings offering by instantly positioning Yahoo as the number two player in the online recruiting segment, which we believe to be one of the fastest growing opportunities within online classifieds," said Yahoo Chief Executive Terry Semel. "We expect HotJobs to drive additional revenue for Yahoo through listing and subscription fees from employers and recruiters."

Although TMP was edged out by Yahoo, the company said it just didn't make sense to enter a bidding war. HotJobs will pay TMP a termination fee of $15 million plus $2 million of expenses.

"While a combination with HotJobs is attractive to us, we do not see a financial or strategic rationale for modifying our bid for the company," TMP Chief Executive Andrew J. McKelvey said in a statement. "With a proven record of performance for users and shareholders alike, we are very comfortable with our prospects. We look forward to competing with HotJobs."

TMP's decision was widely expected by Wall Street analysts, who wagered that TMP did not see HotJobs as strategic enough to enter a bidding war. In a research note Wednesday, UBS Warburg analyst Kelly Flynn said the Yahoo offer was simply better--and less risky--for HotJobs shareholders since it included $228 million in cash along with stock. However, Flynn did not rule out the possibility of another HotJobs bidder.

Salomon Smith Barney analyst Lanny Baker said one reason TMP declined to enter a bidding war was that Yahoo isn't an "overly threatening owner of HotJobs.com given its diversified approach."

A Monster ad campaign
Monster is the leading online recruitment service provider and provides content for America Online and MSN, the top two portals, the company said. According to Jupiter Media Metrix's November ranking of the top 50 Web properties, Monster was ranked No. 31; HotJobs was No. 45.

To ensure Monster stays on top, TMP will launch a new marketing campaign with advertisements during the Super Bowl and the Bowl Championship Series, the company said. The Bowl Championship Series is a series of games to determine the college football national championship.

Monster's "Never Settle" ad campaign will also appear during the Olympic Winter Games.

For its part, Yahoo has made it clear it wants to be a major player in the recruiting game. Analysts said Yahoo is hoping to target listings as a way to diversify its revenue base from advertising.

At a recent daylong meeting with analysts, Semel said the company wants to garner 50 percent to 60 percent of its revenue from advertising and marketing in 2004, down from the 80 percent it gets now.

To accomplish that goal, the Internet portal is also likely to acquire companies where it can be in the running to dominate a niche, analysts said.

"We believe (Yahoo's bid for HotJobs) represents a strong indication that Yahoo is increasing its focus, identifying which markets are most attractive, and aggressively pursuing them," USB Piper Jaffray analyst Safa Rashtchy said in a recent research note.