A Monster deal for Google?
As Google bulks up in the online classifieds biz, some say a buyout of Monster could make sense.
NEW YORK (CNNMoney.com) – Should Google start looking for a Monster under its corporate bed?
The top search engine is preparing to formally roll out Google Base, a service that among other things will allow users to post job listings for free.
Some have speculated that Google could make an even bigger splash in the online classifieds business by acquiring Monster Worldwide, which runs the popular online job site Monster.com.
But Google, with $7.6 billion in cash and a richly valued stock, could easily afford to buy Monster, which is valued at about $5 billion.
Online job listing companies like Monster are rapidly growing as they steal business from newspapers' help-wanted sections. Analysts expect that Monster's sales will jump 19 percent this year, to nearly $1.2 billion, and that profits will surge 35 percent.
There is also optimism that the labor market will continue to pick up steam, which would bode well for Monster. Employment figures for December will be reported on Friday. (For more on the jobs report, click here).
Is speculation off 'Base?'
But does Google need Monster?
Google is already partnering with Monster rival CareerBuilder, which is owned by newspaper companies Gannett (Research), Knight-Ridder (Research) and Tribune (Research). CareerBuilder is uploading some of its job listings to Google Base.
In addition, Google offers listings for free while Monster charges employers and recruitment companies. So the two companies might not mesh well.
Monster's Baker did not rule out a partnership with Google that is similar to the one that the search engine already has with CareerBuilder, however.
"We are always looking at exploring ways to distribute our valuable content more widely to pull more quality users into our service and deliver them to employers," Baker said.
Still, Ashish Thadhani, an analyst with Gilford Securities, said Google needs Monster if it truly wants to become a top dog in the online job listings market.
"The Internet bellwethers have been diversifying into new businesses and Monster offers market leadership by way of deep human resources expertise, a global presence and high-quality traffic," said Thadhani. "It will be hard for Google on its own to represent a serious threat to Monster."
Jim Janesky, an analyst with Ryan Beck & Co., agrees and adds that Google's recent decision to buy a 5 percent position in AOL for $1 billion proves that the company is willing to whip out the checkbook when necessary.
While some were surprised by how much Google was willing to pay for the AOL stake, many believed that the investment was a savvy strategic move to keep AOL, the Internet access and online content division of Time Warner (Research), from signing a deal with Microsoft (Research) to switch from using Google to Microsoft's MSN search tool. (Time Warner also owns CNNMoney.com.)
"Google has shown it's been willing to pay attractive valuations to increase its presence in a business it wants to get into," said Janesky. "I think at some point, if Google wanted to make a bigger push in listings it would make sense to take a look at Monster."
Others may be circling Monster
Shares of Monster gained more than 80 percent since hitting a 52-week low in May and Janesky said that takeover speculation is one reason.
In fact, Google might not be the only company interested in Monster.
Janesky said it could make sense for Yahoo! to take a look at the company. Even though it already owns HotJobs, fee-based businesses still represent just a small portion of Yahoo!'s overall sales. He added that it could even be worthwhile for CareerBuilder or other newspaper companies to consider a deal for Monster.
And Thadhani said that media titan News Corp. (Research) might also want to make a play for Monster. News Corp. rapidly built up its online content division through a series of acquisitions last year.
What's more, News Corp. is one of the world's largest newspaper publishing companies worldwide. Its newspaper division accounted for nearly 20 percent of total sales in the company's most recent quarter.
However, Steve Weinstein, an analyst with Pacific Crest Securities, said that he doubts Monster is looking to sell since the company seems confident in its ability to stay ahead of rivals.
And Baker said Monster has invested heavily in international markets to boost its presence globally and that the company will continue to look for growth opportunities abroad.
"We are a long way away from feeling like our category has reached its growth potential and we feel good about the position we are in today," he said.
Finally, Thadhani points out that a sale will all depend on what the company's chairman and CEO, Andrew McKelvey, wants to do since ownership stake in Monster gives him more than a third of the company's voting power.
"There has been a lot of talk about a takeover and I do think that Monster would be an asset to anyone considering entering into online recruitment," Thadhani said. "But McKelvey holds all the cards."
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Analysts quoted in this story do not own shares of the companies mentioned and their firms have no investment banking relationships with the companies.
The reporter of this story owns shares of Time Warner through his company's 401(k) plan.