Monster Sale Challenged By Newspaper Owner

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Aug 22, 2016

One of the nation’s largest newspaper companies and reportedly Monster’s  largest shareholder said it is opposed to the $429 million sale of the recruiting services firm to Randstad, which was announced two weeks ago, and urged other stockholders to do the same.

“As Monster’s largest shareholder based on publicly available information, MNG believes the $3.40 per share deal would represent the textbook definition of ‘selling at the bottom,’ “said Denver’s  MediaNews Group Inc. in a highly detailed letter it sent to Monster’s Board of Directors.

With improvements in operating efficiency, reduction in capital spending, and the sale or closing of some non-core business units, plus improved sales productivity, MediaNews Group (MNG) claimed Monster could achieve a stock price of $6-$8 in 18 months.

A Monster spokesman said the company has offered no comment on the letter.

The letter goes into detail on each of the five specific recommendations the newspaper company makes. To save $136 million, Monster should reduce its workforce by 1,600 workers. It should also pull out of parts of the world where its business is not profitable and sell its Military and Government Services business.

Pointing out that MediaNews Group is also a job board owner and operator, as well as a reseller of Monster job listings and other services through its 240 newspapers, the publisher said, “therefore we have intimate knowledge of how these businesses work and how they should be operated.”

In addition to the cost savings and improved sales productivity, MediaNews Group said Monster needs to make improvements in how it markets its services. Although it spent $121 million on marketing, MNG said, “what is clear is that the strategy around marketing spend is not working given the acceleration in revenue declines.”  Among the changes MNG recommends is a rebranding campaign to reach millennials.

Included in the letter are tables that compare various aspects of Monster’s revenues and performance to other companies. One of the more interesting comparisons is to Monster competitor CareerBuilder. Unlike Monster, CareerBuilder is privately held by three media companies — Tegna, which owns a majority share, Tribune Media and McClatchy — and is not required — and doesn’t — disclose its financials.

However, MNGs letter estimates CareerBuilder’s 12 month revenue at $700 million, or $250,000 per employee. By comparison, Monster’s per capita revenue is $172,000. “CareerBuilder, Monster’s closest competitor, made the strategic decision to focus its product offering around subscription-based selling in 2015,” says the MNG letter, “and their revenue traction as a result stands in stark contrast to Monster’s, as shown in the table below.”

CareerBuilder has not yet responded to my call asking about the MNG numbers.

In addition to MNG, two law firms are also investigating the sale with an eye to potential legal action. Shareholder rights litigation firm Robbins Arroyo said it is studying whether Monster’s board “is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.” New York’s Faruqi & Faruqi firm is investigating Monster’s board “for potential breaches of fiduciary duties.”