It’s amateur hour at Monster Worldwide’s HQ and Sal Iannuzzi and the Sopranos have some damage control to do.
While working at my computer Friday afternoon (3:45pm to be exact), an email flew across that my trade for the October PUTS executed. I was stunned! I had a “Good Till Cancel” trade for the October $7 PUTS at .60/share. They were trading around .25 earlier in the day. What would cause those options to almost triple in such short order? I quickly went to look the price action on MWW and sure enough the price fell off a cliff (13+%) from over $8 to below $7. But there was no news. What happened?
I shot an email out to my peeps and within minutes, one of them forwarded “tweets” from Twitter saying that Monster apparently rejected a deal from Private Equity for $10/share. Talks between Private Equity and Monster had been going on for quite some time, but once the deal was rejected investors dumped the stock.
This is what I wrote in my posting on July 11th: “The belief inside Monster is that Private Equity will try to scoop it up. I put the over/under on any deal at $11/share. That would give Fat Sal $15 million for literally destroying (in my opinion) a company. If anyone wants to measure the Return On Investment (ROI) for making a bad hire, look no further than Sal Iannuzzi.” (http://bit.ly/RKnDbW)
Looks like I was giving Monster a 10% premium.
The aftermath of this deal collapsing is going to be very interesting. For those who don’t know me personally, I hang around with very smart people. They raise my level and I (of course) lower theirs. In our bantering thread about MWW’s stock collapse Friday, this fabulous point was made.
“MWW thinks they are worth more than $10 per share, so they rejected the bid. Investors clearly think it’s worth less than that, hence the stock price decline. If it was a BS low-ball offer, and investors agreed, then management rejecting it would actually increase the stock price and increase investor confidence in management. What this decline means to me is that there were a high percentage of investors who were in the stock for no reason other than a potential buyout and bailed when they saw it’s less likely to happen. If the market thought there was a suitor willing to go north of $10, they would stick with it.”
Reread that last paragraph and let it sink in. This is not just a fabulous point, it is brilliant! (http://www.youtube.com/watch?v=3DPKf7y1F-Q)
So Sal Iannuzzi can say whatever he wants, but now he has to deliver a deal north of $10/share. From experience I can tell you that buyouts are marathons. Hopefully, for the sake of the shareholders, customers, and employees, he puts down the cannoli and rolls up his sleeves.
Ironically, this also comes on the heels that MGS has been independently shopping itself too. Reliable, yet unconfirmed sources tell me that MGS is pushing a price tag that is simply too hard to swallow. My guess is that MGS Senior Management has been promised a huge commission for helping MWW divest of its government practice.
If MGS were to sell, what name would they use? Munchkin Government Solutions? Minion? Nope, if they sell, which is doubtful given the ever changing landscape, they should simply go back to being called QuickHire.
As another peep quipped, “MGS isn’t investing in their products when they are shopping the company.”
And, this from a 3rd peep: “MGS customers are fed (no pun intended) up with being treated like the step-child and are looking for other alternatives in the marketplace. MGS needs to find a suitor fast while it still has customers to service.”
I’ve said it before and I’ll say it again. I’m the only one who can save MGS. BTW, I’m not calling MGS.
But for now the amateurs in NYC are wallowing in their glory of having spurned a deal. We’ll see what the coming weeks bring, but for those in the Fed HR space be prepared for more let downs.