A Monster of a Takeover Target
The ambassador of good will that he is, Cramer is sending a public service message to one of the most fundamentally troubled businesses in the country: the newspaper business. The message is for Gannett , in particular, but also for all you Homegamers who could benefit from this message as well.
Gannett, a proud newspaper company that’s struggling to stay relevant, needs to call their bankers immediately and tell them they want to buy Monster Worldwide , Cramer says. And he recommends everyone get in on this, too. Cramer thinks Monster has to be bought by Gannett, and if Gannett doesn’t pick it up, then Google very likely could – that makes it a double takeover target. Remember: you get a takeover, you could make big money.
Before you go out and buy Monster, you need to understand why it’s such a logical takeover target, why Cramer thinks it’s willing to be bought, and just how time sensitive this play is. And while they don’t sound like likely bedfellows, Cramer thinks Gannett, a newspaper company, and Monster, an online job-listing company, are a match made in heaven.
The newspaper business simply isn’t viable in the long-term, Cramer says. Companies like Gannett are on a slow death spiral but all hope doesn’t have to be lost. There are ways to survive. Gannett is already the largest shareholder in Career Builder, which is Monster’s biggest competitor. A couple weeks ago, Monster had a big short-fall that took the stock down a level, making it affordable for Gannett to buy it, Cramer says. And if Gannett buys Monster, with Career Builder already in its back pocket, it can combine the two to make the best play in the online job field. By purchasing Monster, Gannett would have the positioning to essentially swap out of a dying industry into a vibrant one that happens to be cheap right now due to U.S. employment being down. Cramer is pleading with Gannett management: save yourselves, he says. Don’t go down with the print media ship – get into Monster, which is the best available lifeboat.
Cramer isn’t recommending Gannett, though. No way. They’re desperate, but their desperation could benefit you if you own Monster.
Monster is dropping hints that it wants to be bought, Cramer says. They recently put in a new CEO, Sal Iannuzzi, who Cramer thinks would be ready and willing to sell. He already salvaged a big win for Symbol Technologies by orchestrating the buyout by Motorola in January. Cramer thinks he came to Monster to make a deal.
There’s some other evidence, too. Monster made Goldman Sachs’ list of most likely private equity plays; the same list that identified First Data right before it got its takeover bid. Monster’s got a great balance sheet with almost $5 per share in cash and no leverage. The private equity players just love that, Cramer says.
Let’s say Gannett doesn’t do the smart thing and it passes on Monster. Cramer thinks it could be a great move for Google to buy it and then wipeout Career Builder, which it could do by creating a Craigslist-type free model. Google’s stock jumped when it won the Doubleclick bidding war, even though it paid 12 times revenues for the online advertising company. With that valuation, Monster –a $44 stock right now – would be worth $160 per share. Not a bad premium.
Cramer thinks Monster’s got a great long-term story, and he sees not one but two companies who could come out and buy it. He doesn’t see how Gannett could even survive if it didn’t buy Monster fast, and Google could be eyeing it as a way to conquer another piece of the Internet. Either way, with a CEO who lives to sell companies, Cramer says Monster is a good play for Gannett, and for you.
Bottom line: Cramer thinks Monster practically has a for-sale sign out front. It’s only a matter of time.
Jim's charitable trust owns Goldman Sachs.
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