Behind the deal: SEEK’s Asia push a long game

Published 24 February 2014 10:54, Updated 25 February 2014 09:31

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Behind the deal: SEEK’s Asia push a long game

SEEK chief executive Andrew Bassat at the AGM last year. Photo: Georgia Metaxas

SEEK’s interest in Asia’s online ­employment company, JobStreet ­Corporation, dates back at least six years, about the time James Packer was still chairman of the burgeoning ­Melbourne-based company.

In 2008, SEEK swooped in to buy 10 per cent of a provider of similar online services in south-east Asia, ­JobStreet. The two web-based employment businesses were treading a similar growth path.

SEEK was founded in 1997 by ­brothers Andrew and Paul Bassat, who are now on the BRW Rich 200, and Matthew Rockman, with a focus on Australia and soon after pushed into New Zealand.

JobStreet was started by founder Mark Chang, who graduated from ­Massachusetts Institute of Technology with a science master’s degree in mechanical engineering.

In 1996, Chang started Malaysia Online, which was reportedly the ­country’s first commercial web site and later morphed into job listings business JobStreet.com.

As financial markets were settling post the global financial crisis, the two companies were bracing for strong earnings growth in their respective markets and in new ones. In early 2010 – 18 months after SEEK acquired more than a toehold in JobStreet – entrepreneurial SEEK snapped up another 11.2 per cent stake.

This strategic manoeuvre was ­evidence SEEK had a close eye on its counterpart and was perhaps seeking more than a seat at the table.

December 2010 was also a key ­turning point as SEEK pounced on one of JobStreet’s main regional rivals, ­JobsDB, purchasing a 60 per cent stake. The move prompted JobStreet to turn to advisers to explore its own options.

Informal discussions between SEEK and JobStreet occurred frequently in the next three years as the move to ­digital platforms was in full swing. Approaches from other interested ­parties were also fielded.

From a JobStreet perspective, chief operating officer, Suresh Thirugnanam and several other key management ­personnel were heavily involved, as they also owned large parcels of stock in the company.

But it was not until the third and fourth quarters of 2013 that real traction was made.

Andrew Bassat, and SEEK ­international boss Jason Lenga rallied their internal deal team of more than 10 people into action .

Goldman Sachs Melbourne-based head of mergers Nick Sims – who has a long-standing relationship with SEEK – was on hand. He knew the company well, after helping to steer several SEEK deals including the purchase of the ­controlling stake in JobsDB.

For this transaction, which was multi-faceted, another investment bank with strong links in Malaysia and south- east Asia was drafted in to help.

Malaysian-based CIMB scored the joint advisory role with a mandate and local investment banking boss Oscar Ludwigson was the point person on the transaction, helped by bankers on the ground in Malaysia and Singapore.

In the JobStreet camp were Lazard, HwangDBS, and DBS Bank, alongside AmInvestment Bank.

Due diligence and management meetings started in November, and the SEEK deal team was back and forward from Melbourne and Sydney to Singapore at least four or five times.

The key to a deal getting secured was winning the support of management and board members, who owned in the order of 40 per cent per cent of ­JobStreet.

The prize for SEEK was in sight. JobStreet, which listed on the Malaysian stock exchange in 2004, had exposure to key geographies including Malaysia, Singapore, Indonesia the Philippines and Vietnam. In more simple terms, it reached more than 11 million jobseekers and more than 100,000 employers.

SEEK also needed to closely consider the financing and structure of the transaction, keeping in mind its existing footprint in Asia.

SEEK backers were kept in the loop at various points.

PwC was on hand as an accounting and tax adviser, doing some of the data and number crunching.

Michael Horman of Baker & McKenzie helped with the legal work, while SBA Law’s principal Steven Klein, whose profile says he has worked with Seek since it was established in 1997, was also on deck.

The advisers spanned more than five countries in the Asia Pacific region.

On the weekend before the deal was announced by SEEK, members of the team spent the weekend in Hong Kong, formalising the details ahead of a SEEK board meeting.

The SEEK board, led by Neil Chatfield, met and signed off on the broad parameters of the deal early in the week but allowed some scope for tweaking .

Even as a trading halt in JobStreet shares late on Tuesday evening gave a hint something was a foot, SEEK advisers and the internal team were ­bunkered down at their St Kilda Road headquarters working through the night to ensure the announcement would coincide with the company’s interim results.

Sustenance, or pizza, was ordered in to help survive the working night. It was Wednesday morning and SEEK had a two-pronged announcement.

It outlined the agreed transaction that will see SEEKAsia buy JobStreet, and combine it JobsDB. Seek will own about 75 per cent of the merged entity. Co-investors News Corp will account for 12 per cent,Tiger Global 9 per cent, and Macquarie Capital 4 per cent

Total consideration is $580 million, SEEK is tipping in $374 million, ­including existing JobStreet equity and cash. News Corp & Tiger together are contributing some $83 million .

The company also put together a new bank facility, intending to access debt funding.

The transaction is by no means done though. JobStreet’s shareholders need to give the deal the green light and it needs regulatory approvals, including that of the competition commission in approval in Singapore.

Investors digested the announcements and responded with gusto, sending SEEKS shares soaring almost 18 per cent on Wednesday. Settlement is expected in last quarter of this financial year.

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