HotJobs.com Inc. Thursday officially backed out of an acquisition agreement made in June with TMP Worldwide Inc., accepting a larger, unsolicited bid from rival suitor Yahoo! Inc.
Yahoo, an online media giant that provides services to millions of people a month, will pay $10.50 per HotJobs share in a cash and stock deal, valuing the company at $436 million.
TMP Worldwide, operator of the No. 1 job Web site Monster.com, had agreed to buy HotJobs in a stock deal initially valued at $460 million. But that offer has declined in value considerably, to about $355 million, due to a drop in TMP's stock price.
Analysts hailed the Yahoo-HotJobs tie-up, saying the acquisition is a key step in Yahoo's move toward more fee-based services and away from a reliance on advertising revenue, which has stagnated this year amid the economic slowdown.
Yahoo shares rose 41 cents, or 2 percent, to $17.92 in early trade on Nasdaq, while HotJobs stock fell 30 cents, or 3 percent, to $10.37. TMP shares rose $2.49, or 6 percent, to $44.36, as investors apparently were relieved that TMP did not enter a costly bidding war for HotJobs.
"Yahoo has been looking to diversify their revenue mix away from being 100 percent dependent on advertising, and clearly the career space, or the help wanted space, is a terrific business," UBS Warburg analyst Christopher Dixon said.
For TMP, a diversified advertising company with more than 10,000 employees, the lost bid is a failed attempt at bringing together the No. 1 and No. 2 online job recruitment Web sites. TMP's Monster.com remains the largest site of its kind despite the tie-up between Yahoo and HotJobs.
If TMP had gained control of HotJobs, the combination would have held more than 14 million resumes and 650,000 job listings.
While Yahoo has an online job listing service, it is small compared to HotJobs and Monster.com. But Yahoo has deep pockets and an immense list of users, which will likely help HotJobs compete against Monster.com.
The original deal between TMP and HotJobs had been held up by U.S. federal Trade Commission inquiries, reportedly related to antitrust concerns.
On Monday, HotJobs declared Yahoo's rival bid superior, and gave TMP a 72-hour ultimatum to increase its bid.
TMP Thursday said it found no financial or strategic rationale for increasing its original offer. The company said it has strong relationships with Internet providers America Online and Microsoft Corp.'s MSN, and analysts said it will remain the largest online recruitment company.
"Monster is still a monster," said John Corcoran, an Internet analyst at CIBC. In the online recruitment market, he said, "it is much larger than even the combined HotJobs-Yahoo."
Without a sweetened offer, HotJobs walked out of the agreement, paying TMP a termination fee of $15 million and $2 million for other expenses.
Analysts estimate about $1 billion of the $10 billion jobs classified market is spent online, and is expected to grow up to 35 percent a year, according to one estimate.
The jobs listings business shows resilience in an economic recession, analysts have said, because people continue to look for employment when times go sour.
Corcoran said HotJobs' revenue is expected to grow 16 percent next year, faster than Yahoo's expected growth of 9 percent.
But questions remain about overlap of Yahoo and HotJobs' users' list and resumes file, Corcoran said, which could limit the potential benefits of the merger.