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Sell into Mediagrif transaction hype, says Cormark’s Tse

Mediagrif

Mediagrif Cormark analyst Richard Tse says he is wary of the limited information available about two recent Mediagrif (Mediagrif Stock Quote, Chart, News: TSX:MDF) acquisitions.

On Friday, Mediagrif announced it had reached a definitive agreement with Quebecor Media to acquire online recruitment and labour market intelligence provider Jobboom and Quebec’s most popular dating site, Réseau Contact, for $65-million.

CEO Claude Roy said the pickup of the two properties will complement the company’s current businesses.

“These acquisitions represent a unique opportunity for Mediagrif to have these two prominent brands join up with the well-known LesPAC.com brand, bringing new networking possibilities to Jobboom.com, ReseauContact.com and LesPAC.com’s millions of members,” he said. “Through this transaction, Mediagrif will gain a first-rate Web presence in Quebec.”

Tse says assessing the valuation and potential impact of this transaction is particularly difficult. He says there was very little information in the press release and management, when contacted, could not provide any financial information. The Cormark analyst says this is worrying because a cursory look at Google Trends shows a declining trend in traffic engagement for both Jobboom and Réseau Contact. He says investors should exercise caution around this name right now, and says he would sell into the transaction hype. In a research update to clients this morning, Tse reiterated his REDUCE recommendation and $18 target price on Mediagrif.

Founded in 1996, Longueuil, Quebec-based Mediagrif offers a range of e-commerce services through B2B platforms such as The Broker Forum, Power Source Online, and Carrus Technologies. The company became increasingly profitable as it grew its revenue from $47.9-million in 2009 to $53.8-million in 2012. In its recent Q3, Mediagrif earned $3.47-million on revenue of $15.1-million.

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About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.

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One thought on “Sell into Mediagrif transaction hype, says Cormark’s Tse

  1. I agree, especially when you look at the recent loss of the Federal Government tendering contract with MERX. Throw in the fact that almost all gains in EPS have come from cost reductions over the last 4 years (very scary looking chart).

    LesPAC is a french only version Kijiji that is only popular in Quebec, it also requires one to pay to post an ad… not sure how long that business model will last before Kijiji takes over. Now ad the fact they way over paid for Jobboom.com and ReseauContact.com. My guess is the top is in.

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