Analysts Weigh in on Careerbuilder Deal, Estimate Value

By: Jennifer Saba There were few surprises in Tuesday?s announcement that McClatchy would retain a 15% equity stake in CareerBuilder.com, while Gannett and Tribune increased their shares. Financial analysts pretty much expected the outcome though some thought CareerBuilder was worth more than $1.5 billion.

Prudential Equity Research analyst Steven Barlow estimated CareerBuilder to be worth around $2 billion, based on the valuation of Monster.com with a market cap of $5 billion. In a note, he pointed out that MediaNews Group was shut out of the process, a different outcome than the research firm expected.

Merrill Lynch analyst Lauren Rich Fine estimated CareerBuilder?s value at $1.7 billion, also partially based on Monster. In a note released today, she mentions the disparity ?likely lies in the profitability of the two companies.? Merrill Lynch noted that Monster?s operating margins are just over 20% while CareerBuilder is still in the red.

Alexia Quadrani at Bear Stearns viewed the deal as a positive. Tribune and Gannett increased their share in a growing company -- 42.5% each -- while keeping McClatchy on board, ?which is particularly important in light of Monster?s aggressive recent moves into the space.?

Monster announced last week that The Philadelphia Inquirer and Daily News, once part of the CareerBuilder network under its old ownership of Knight Ridder, switched to Monster.

Gannett, Tribune, and Knight Ridder each owned one-third of CareerBuilder. McClatchy inherited Knight Ridder?s stake but Gannett and Tribune had first right of refusal.