Friday, 31 October 2014

SEEK clears last hurdle in JobStreet acquisition

For several months already, ever since the announcement was made in February that would divest its job portal business to SEEK Asia Investment, a subsidiary company of SEEK Australia, the shareholders in the company had been wondering when on earth can the deal be concluded. Initially, it was believed that this acquisition by SEEK would proceed rather smoothly but as the weeks rolled into months, it became clear that there was one last potential hurdle to overcome.

Ironically, this obstacle did not come from the Malaysian authorities despite being public-listed on Bursa Malaysia, but from Singapore. There, the Competition Commission of Singapore was casting an eagle eye on the divestment plan as the merged entity (comprising and could potentially create a monopoly business in the island republic.

In Singapore, JobStreet and JobsDB are the two biggest job portals, competing neck-and-neck for market share. SEEK Asia Investment had already owned a hundred percent share of JobsDB and in buying over the job portal business from the Singapore arm of JobStreet Singapore, CCS certainly had their reasons to be cautious. Definitely, CCS recognised that both JobStreet and JobsDB were each other’s closest competitors and they needed assurance that the merger would not give rise to "non-coordinated" effects.

To address this concern, SEEK later offered the following behavioural commitments:
a.    To address the concern that the merged entity may be able to alter the structure of the market by demanding exclusive, “lock-in” contracts which prevent customers from switching away from the merged entity, SEEK commits not to enter into exclusive agreements with employer and recruiter customers. By deterring exclusivity and lock-ins, the behavioural commitments aim to retain the current practice of multi-homing (the practice of using more than one online recruitment advertising platform) by employers and recruiters, as well as jobseekers and aims to keep barriers to entry and expansion low, thereby preserving competition in the market for online recruitment advertising services.
b.    To address the concern that the merged entity may be able to increase prices post-merger, SEEK commits to maintain current pricing of its services capped at present day rate cards or current day negotiated prices, subject to Consumer Price Index variations. By capping pricing at current levels, the behavioural commitments seek to address concerns identified by market participants during the Phase 1 and 2 reviews that the closeness of competition between the Parties may cause prices to rise post-merger.
After a lengthy period of the CCS seeking market consultations and evaluating industry feedback, during which time shareholders of JobStreet were in the dark and left wondering nervously whether the acquisition could ever be cleared at all, there is now general relief.

This item just appeared under "Company Announcements" for on the Bursa Malaysia website. The good news for JobStreet shareholders is that the last hurdle of the sale of the JobStreet Singapore to SEEK Asia Investments has been overcome with the CCS granting conditional approval to the acquisition.

This announcement should be read in conjunction with the earlier announcements made on 19 February 2014, 21 February 2014, 29 April 2014, 12 May 2014, 14 May 2014, 15 May 2014, 24 June 2014, 1 July 2014, 19 August 2014, 21 August 2014 and 9 October 2014 in relation to the Proposals (“Announcements”). Unless otherwise defined, the terms used in this announcement shall have the same meaning as those defined in the said Announcements in relation to the Proposals.

On behalf of the Board, Affin Hwang Investment Bank Berhad wishes to announce that CCS had, as set out in their media release dated 31 October 2014, as attached, issued a favourable decision in respect of the Proposed Disposals.

The CCS concluded that the Proposed Disposals, if carried into effect, will not infringe the section 54 prohibition of the Singapore Competition Act (Cap. 50B), subject to the implementation of, and compliance by SEEK, with the Proposed Commitments and the Proposed Divestiture Commitment.

In issuing the favourable decision, the CCS has accepted the Proposed Commitments offered by SEEK in order to address the potential competition concerns that may arise as a result of the Proposed Disposals.

In addition, the CCS has also accepted the Proposed Divestiture Commitment offered by SEEK in order to address the potential competition concerns in respect of SEEK’s ownership and operations of in Singapore.

Please refer to the attached document from the CCS with regards to the Proposed Disposals for further details.

With the above favourable decision from the CCS, all the conditions precedent to the closing of the Proposed Disposals have been satisfied or waived in accordance with the terms of the SSA.

Barring any unforeseen circumstances, the Board expects the Proposed Disposals to be completed within November 2014 whilst the Proposed Distribution is expected to be completed by the end of 4th quarter 2014. Further details will be announced in due course.

This announcement is dated 31 October 2014.

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