Monster dominates on Randstad buyout; Walter Investment lauds strategic transactions

By Stephanie N. Rotondo

Seattle, Aug. 9 – Monster Worldwide Inc.’s 3.5% convertible notes due 2019 were all the rage in convertibles trading on Tuesday, according to one market source.

The stock was meantime up over 25% as the market reacted to news that Randstad Holding NV was acquiring the job search and staffing services company.

Meanwhile, a trader said Walter Investment Management Corp.’s 4.5% convertible notes due 2019 were pushing higher as well, despite reporting earnings that missed expectations.

However, the company also announced that it had agreed to sell $35 billion in seasoned mortgage servicing rights, as well as substantially all the assets of Walter Capital Opportunity, to New Residential Investment.

Should both transactions close – expected in the third or fourth quarter – it will bring in over $500 million for Walter Investment.

Monster up on buyout

Monster Worldwide’s 3.5% convertible notes bounced around par on Tuesday in the wake of news the company was being acquired by Dutch recruitment company Randstad.

The notes closed just north of par, though a market source saw the issue hitting a low of 99.25 earlier in the day.

The equity underlying the debt experienced a sizable bump, rising 73 cents, or 26.35%, to $3.50.

Randstad will pay $429 million for Monster, or $3.40 per share – a 23% premium over Monday’s closing share price.

Upon the closure of the sale, Weston, Mass.-based Monster will delist from the New York Stock Exchange. It will operate under the Monster name as a separate entity from Randstad.

The transactions is expected to be completed in the fourth quarter, subject to regulatory approvals and other conditions.

Walter sales a positive

Walter Investment’s convertible notes were moving up as the company announced a series of strategic transactions on Tuesday.

News of the asset sales appeared to outweigh earnings that were less than stellar.

A trader saw the 4.5% convertible notes bid at 42 in size early in the day, though only small pieces had been trading.

He said the smaller-sized trades were occurring around 34.

“Walter hasn’t made very good investments; that’s why they are trading in the 40s instead of the 90s,” the trader said.

Another market source placed the issue around 42, which was called up about 7 points from last week.

At another desk, a trader also saw the paper ending at 42, which was up from the mid-30s previously.

The stock also got a boost, improving 43 cents, or 18.86%, to $2.71 – still well down from the $19.40 per share price seen a year ago.

The Tampa, Fla.-based loan servicing company announced early in the day that it was selling off mortgage servicing rights, as well as nearly all of the assets of Walter Capital Opportunity and its subsidiaries to New Residential Investment.

Combined, the transactions are expected to bring in $514 million.

That news came on the heels of the company’s second-quarter earnings release, which missed analysts’ expectations.

For the quarter, Walter reported a loss of $232.4 million, or $6.49 per share.

On an adjusted basis, earnings came to 7 cents per share.

Revenue was $187.5 million.

Analysts polled by Zacks Investment Research had expected adjusted EPS of 16 cents on revenue of $255.8 million.

Mentioned in this article:

Monster Worldwide Inc. NYSE: MWW

Walter Investment Management Corp. NYSE: WAC

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