19 Aug 2016
MediaNews Group, which described itself as the largest shareholder in Monster Worldwide, today slammed Monster’s board of directors about the proposed sale of Monster to Randstad, the Dutch HR company. MNG said it would not tender its shares, and promised a fight for a better deal, or for improvements at Monster.
“The situation the company finds itself in, is a result of poor execution combined with poor oversight by the current board. The opportunistic offer by Randstand takes advantage of these circumstances,” MediaNews Group said in a public letter to the board of Monster Worldwide (NYSE: MWW). MNG said it owns 11.6 percent of MWW’s outstanding shares.
“We strongly feel that selling now at such a low price would be the textbook definition of ‘selling at the bottom’,” the letter said.
Monster Worldwide announced plans two weeks ago to sell itself to Randstad Holdings nv at a price of $429 million U.S., or $3.40 per share. Several recruitment analysts, including Joel Cheesman, John Zappe and Jeff Dickey-Chasins, all said the deal showed how badly Monster Worldwide had failed.
Shares of MWW surged more than 7 percent in morning trading on the NYSE after the letter was distributed.
MNG, based in Denver, operates more than 240 newspapers and websites in the U.S.. Many are Monster resellers. MNG also operates small job boards in New England, “and therefore we have intimate knowledge of how these businesses work, and how they should be operated,” it said.
“We initially established a position in Monster (stock) some time ago, because we believed the stock was tremendously undervalued relative to its long-term prospects,” the company said.
In its 3,900-word news release and letter, MediaNews Group dissected Monster’s operations and said the company should shut down some businesses, sell others, reduce capital spending and increase sales while cutting $100 million to $150 million out of expenses.
“It’s clear that Monster could do more to make the company more efficient,” MediaNews Group said. “Monster’s overall operating margin, at 13.8 percent, are almost ten points below CareerBuilder’s 23 percent.”
Monster Worldwide did not issue an immediate response. Matt Anchin, SVP of global communications and content, and Kristen Andrews, the company’s spokeswoman, were both out of the office this week. A call to investor relations went straight to voicemail.
MediaNews Group dissected Monster’s operations bit by bit, saying the company has more than 60 office locations and should reduce them while eliminating many of its money-losing international operations. It also said Monster should outsource its technology infrastructure “so that Monster can focus its technology staff on product innovation to support revenue growth.”
In a revenue-per-employee analysis, MediaNews Group said Monster generates less than half of LinkedIn’s $347,000 per-employee, at $172,000, while Indeed is at $290,000 per employee, DHI Group (parent of Dice and other major niche sites) is at $286,000 and CareerBuilder at $250,000. By cutting staffing from 3,700 to 2,100, the company could cut its operating expenses by $136 million annually, MNG said.
MNG said Monster should be able to increase its stock price to $6 to $8 per share by early 2018. “Therefore, we DO NOT intend to tender our shares in the upcoming tender and we urge all other Monster shareholders to follow suit,” it said. (Emphasis by MNG.)
“Monster’s stock has consistently underperformed … versus its peers and the market over any relevant period of time,” MNG wrote. It noted that Monster has been buying back shares at more than $6 per share, “[making] us question why the company supports a sale of the business at $3.40 per share.”
“We understand that the acceleration of revenue declines in the North American business and the lack of profitability in the international business are causes for concern,” MNG said. It urged other shareholders to contact MNG to consider options for fighting the Randstad deal.