Spark Networks, owner of JDate, Christian Mingle, along with other dating web sites, is dealing with an intense activist campaign by the hedge investment Osmium Partners, which will be trying to unseat the board and force a purchase regarding the distressed company.
Then Spark Networks, owner of JDate, Christian Mingle, and a handful of other niche dating sites, is about to get its heart broken if love is a battlefield.
Osmium Partners is nearly particular to win the four board seats it is gunning for when Spark holds its yearly shareholder conference a few weeks, sources acquainted with the specific situation stated, allowing the activist hedge investment to take solid control and force a purchase regarding the company. Initially planned for June 17, Spark has recently delayed the yearly conference until June 28, a move these sources stated is directed at purchasing Spark more hours to rally investors to vote down Osmium’s proposal or preempt a forced sale by securing unique buyout offer.
A representative for Spark, which trades underneath the “LOV” stock ticker, declined to comment beyond citing the business’s general public filings.
Osmium, which has 15percent of Spark, established its proxy battle in December 2013, citing just what it claims are Spark’s bad corporate governance, settlement issues, and stock price that is declining. The hedge investment additionally alleges that Spark has mismanaged JDate, its “crown jewel,” and that its Christian companies have actually been underperforming in accordance with their internet dating peers.
The market and shareholders seem to have actually fallen right out of love with “LOV. at a per share price of around $5, a almost 50% decrease within just per year” As Osmium waits to see whether voters will think its four board nominees are a definite match, listed here is a review of a few of the hedge investment’s other gripes with Spark, according to a presentation it offered to investors in might:
Too little rebranding and bad online strategy.
Osmium stated with its presentation that Spark has neglected to rebrand JDate, which, along side Christian Mingle, has taken into account 95percent of this business’s revenue since its inception 17 years back. Spark only got around to rebranding JDate in this season’s very first quarter, as well as its Chairman and CEO Greg Liberman also conceded to the failure on its very first quarter 2014 earnings call, where it reported its subscriber numbers that are slowest since 2006.
In addition, the advertising associated with JDate rebranding, as well as Christian Mingle, has fallen quick while the business’s shelling out for these endeavors has received repercussions that are dire based on Osmium.
“Spark’s ‘media strategy’ can be an unverified and distraction that is immaterial the business’s core, high-margin premium dating company,” Osmium published with its presentation. “These distractions beyond your core that is scalable have actually resulted in $29.4 million in fixed overhead supported by simply $69 million in income. This has lead to Spark earning cash per employee this is certainly 71% less than competitors Match.com, eHarmony and Zoosk.”
Failure to innovate.
Osmium additionally claims that Spark has neglected to innovate and remain competitive through the creation of “add-ons,” or features beyond the standard https://www.connecting-singles.org site that is dating of profile creation and use of a database. The hedge funded cited HowAboutWe for partners and “featured profiles” on eHarmony and OKCupid as samples of brand name add-ons which have strengthened profitability at these websites.
Management that is “pleased” with bad outcomes.
Despite profits misses and a stock that is declining, Osmium contends that Spark’s administration is delusional with regards to the business’s financials.
“We think Mr. Liberman has utilized your message ‘pleased’ no fewer than 20 times on profits telephone phone calls explaining the business’s outcomes throughout the last eight quarters,” Osmium’s presentation states. “Over this time around period, the business has created over $32 million in net LOSSES вЂ” 30% associated with the economy limit.”
Spark administration can also be perhaps not placing its cash where its lips is whenever it comes to spending within the company.
“Management and Board have actually restricted money in danger in outright stock ownership,” Osmium reported. “Excluding investment they received at no real price to by themselves, administration together with Board collectively obtain just 0.2percent of this business.”
Mariah Summers is really company reporter for BuzzFeed Information and it is located in brand new York. Summers states on hospitality, travel and estate that is real.