Spark Networks, owner of JDate, Christian Mingle, along with other dating sites, is dealing with a tough activist campaign by the hedge investment Osmium Partners, which will be seeking to unseat the board and force a purchase regarding the distressed business.
If love is really a battlefield, then Spark Networks, owner of JDate, Christian Mingle, and a small number of other niche online dating sites, is approximately to obtain its heart broken.
Osmium Partners is practically particular to win the four board seats it is gunning for when Spark holds its annual shareholder conference a few weeks, sources acquainted with the problem stated, allowing the activist hedge investment to seize control and force a purchase associated with the company. Initially planned for June 17, Spark has delayed the yearly conference until June 28, a move these sources stated is targeted at purchasing Spark more hours to rally investors to vote down Osmium’s proposal or preempt a forced sale by securing a unique buyout offer.
A agent for Spark, which trades underneath the “LOV” stock ticker, declined to comment beyond citing the business’s general general public filings.
Osmium, which has 15percent of Spark, established its proxy battle in December 2013, citing just just what it claims are Spark’s bad corporate governance, settlement issues, and decreasing stock cost. The hedge fund additionally alleges that Spark has mismanaged JDate, its “crown jewel,” and therefore its Christian companies have actually been underperforming in accordance with their online dating sites peers.
At a per share price of approximately $5, a almost 50% decrease within just per year, the marketplace and investors may actually have fallen right out of love with “LOV.” As Osmium waits to see whether voters will think its four board nominees are really a match, here is a review of a few of the hedge investment’s other gripes with Spark, according to a presentation it provided to investors in might:
Too little rebranding and marketing strategy that is poor.
Osmium said with its presentation that Spark has neglected to rebrand JDate, which, along side Christian Mingle, has taken into account 95percent associated with the business’s income since its inception 17 years back. Spark just got around to rebranding JDate in this present year’s very very first quarter, as well as its Chairman and CEO Greg Liberman also conceded to the failure on its very very very first quarter 2014 earnings call, where it reported its subscriber numbers that are slowest since 2006.
In addition to this, the advertising associated with JDate rebranding, as well as for Christian Mingle, has fallen brief additionally the organization’s shelling out for these endeavors has received serious repercussions, based on Osmium.
“Spark’s ‘media strategy’ is an unverified and distraction that is immaterial the business’s core, high-margin premium dating company,” Osmium had written with its presentation. “These interruptions beyond your scalable core company have actually resulted in $29.4 million in fixed overhead supported by simply $69 million in revenue. This has led to Spark generating revenue per worker this is certainly 71% less than rivals Match.com, eHarmony tagged sign in and Zoosk.”
Failure to innovate.
Osmium additionally claims that Spark has neglected to innovate and remain competitive through the development of “add-ons,” or features beyond the original dating internet site solutions of profile creation and use of a database. The hedge funded cited HowAboutWe for partners and “featured profiles” on eHarmony and OKCupid as types of brand name add-ons which have strengthened profitability at these websites.
Management this is certainly “pleased” with bad outcomes.
Despite profits misses and a decreasing stock cost, 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 phone phone calls explaining the business’s outcomes throughout the last eight quarters,” Osmium’s presentation states. “Over this time around duration, the business has created over $32 million in net LOSSES вЂ” 30% for the economy cap.”
Spark administration can also be perhaps perhaps not placing its cash where its lips is whenever it comes down to investing within the business.
“Management and Board don’t have a lot of money at an increased risk in outright stock ownership,” Osmium stated. “Excluding investment they received at no real price to on their own, administration while the Board collectively have just 0.2percent for the business.”
Mariah Summers is company reporter for BuzzFeed Information and it is situated in ny. Summers states on hospitality, travel and real-estate.