Reason why JobStreet is selling

This excerpt is extracted from the JobStreet.com Annual Report 2013 which explains the rationale behind the company’s decision to sell their online job portal business to Australia’s SEEK Asia Investment Pte Ltd.
SALE OF THE ONLINE JOB PORTAL BUSINESS TO SEEK
As referenced above, the online job portal market has evolved into an increasingly competitive and complex industry environment with new competitors and social media being increasingly used as a recruitment platform for candidates, employers and head hunters alike. Against this backdrop and an uncertain global economic environment, our Board has been constantly evaluating the long term growth strategy of the business.
Over the past few years, JobStreet.com, led by the present management team, has enjoyed tremendous growth. Our online job portal business has expanded from a Malaysian company into a regional firm with operations in 8 countries in the Asia-Pacific. While the business continues to deliver strong performance, we feel that we have now approached a strategic crossroad. Against an evolving global environment where competition has no physical boundaries and limited barriers to entry, JobStreet.com would need the resources and capabilities to take the next leap forward. Acquisition by a larger player like SEEK, will allow Jobstreet.com’s online job portal business to continue to develop market depth, deliver innovative products and ensure best-in-class services for our customers.
The sale of the online job portal business would allow the Group to immediately unlock substantial value in the business which is consistent with the Company’s intent of maximizing returns to shareholders. The Board views the sale as an attractive offerforshareholders to realise the value of the business, by selling it to a larger global player and distributing the proceeds to shareholders.
SEEK is a multinational company with a global footprint as well as a presence in the region built over many years. SEEK would have sufficient financial resources, economies of scale and management depth to strategically take on the global competitive threats. SEEK has been our shareholder since 2008 and it became our single largest shareholder in 2010 with a 22% slake. As you might be aware, in the same year, SEEK acquired a 60% stake of our primary competitor, Hong Kong based JobsDB, which was subsequently increased to 100% in late 2012.
The sale price of RM1.73 billion represents an EV/EBITDA ratio of approximately 22.2 times based on the proforma consolidated EBITDA of the disposal companies of RM77.9 million for the financial year ended 31 December 2013 and a PE ratio of approximately 30.7 times based on the proforma consolidated PAT of the disposal companies of RM58.6 million for the financial year ended 31 December 2013. We believe this is a fair and attractive price for our shareholders.
After due consideration and having considered all aspects of the sale, the Board decided that acceptance of the offer from SEEK would be in the best interest of shareholders. lt is with a tinge of sadness, but more than anything, a great sense of pride, that we see how the JobStreet.com job portal business has come of age, from a start-up in 1995, into a business courted by venture capitalists in 1999, to an IPO on the MESDAQ market in 2003 and the subsequent migration to the Main Board in 2007 before being valued at RM1.73 billion for the proposed sale.
At the time of writing, you as our shareholders have approved the sale at the Extraordinary General Meeting held on 14 May 2014. The proposed sale is still pending the approval from the Competition Commission Singapore.
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