Don’t Deny It, LinkedIn: A Monster Worldwide Deal Makes Sense

by Tom Taulli | May 14, 2012 1:28 pm

Back in March, Monster Worldwide (NYSE:MWW[1]) CEO Salvatore Iannuzzi said he was willing to sell the company[2]. However, rather than spurring investor interest, the stock has languished since then — until last Friday, when it spiked almost 20%.

Of course, that last jump came as willingness to sell was finally coupled with a potential buyer. The rumor was that LinkedIn (NYSE:LNKD[3]) was interested in making a play for Monster. The reports seem to be mostly speculation — a source reportedly said the company has “zero interest” in a deal[4] — but LinkedIn shouldn’t be so hasty with the denials.

In many ways, a deal would make sense.

It’s true that the traditional jobs posting business is somewhat dated. But Monster still has a well-known brand, which remains important in the hypercompetitive Internet world. It also could be a great way to expand into another market segment, as LinkedIn traditionally has catered primarily to higher-paid professionals.

Monster also has a strong international footprint. Granted, a big part of said footprint is in Europe, which is mired in economic turmoil. But it’s hard to imagine things not improving at some point, which ultimately should lead to more growth. Monster also recently struck a four-year, $23 million contract with the U.K.’s Department for Work and Pensions in which it will provide job-matching technology to the agency.

This is an example of perhaps Monster’s most valuable asset — its extensive sales organization, which has contracts with businesses of all sizes as well as government agencies, educational institutions and advertising agencies. This infrastructure could be extremely valuable for LinkedIn, which could accelerate the monetization of its own massive user base.

Monster also already has taken tough actions to cut costs and reorganize its operations, which has involved a 7% cut in headcount, spending controls and consolidation of facilities. At the same time, Monster has continued to invest in its core products, such as BeKnown, a recruiting app for Facebook.

Even if LinkedIn decided it had no use for Monster’s business, LNKD still could buy out Monster and burn everything to the ground, taking another competitor off the field. That also would ensure a giant Internet player like Google (NASDAQ:GOOG[5]) or Microsoft (NASDAQ:MSFT[6]) couldn’t swoop in and make a play for the company.

LinkedIn might prefer to focus on internally building its own platform, but with a valuation of $11 billion, the company currently has a great opportunity to leverage its stock to buy quality assets. LNKD also is debt-free and has $600 million in the bank — which is earning minimal returns — that could be used to finance an acquisition of the roughly $1 billion company.

LinkedIn can brush off rumors all it wants, but behind closed doors, it should give Monster a real consideration.

Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “The Complete M&A Handbook”[7], “All About Short Selling”[8] and “All About Commodities.”[9] Follow him on Twitter at @ttaulli[10] or reach him via email[11]. As of this writing, he did not own a position in any of the aforementioned securities.

Source URL: https://investorplace.com/2012/05/dont-deny-it-linkedin-a-monster-worldwide-deal-makes-sense/

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