Spark Networks, owner of JDate, Christian Mingle, as well as other dating internet sites, is dealing with a intense activist campaign by the hedge investment Osmium Partners, which will be trying to unseat the board and force a purchase of this company that is troubled.
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 in a few days, sources acquainted with the problem stated, allowing the activist hedge fund to seize control and force a purchase of this business. Initially planned for June 17, Spark has recently delayed the meeting that is annual June 28, a move these sources stated is targeted at purchasing Spark longer to rally investors to vote down Osmium’s proposal or preempt a forced sale by securing its very own buyout offer.
A agent for Spark, which trades beneath 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 exactly exactly exactly what it claims are Spark’s bad business governance, settlement issues, and decreasing stock cost. 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 out from love with “LOV. at a per share price of approximately $5, a almost 50% decrease in under per year” As Osmium waits to see whether voters will think its four board nominees really are a match, listed here is a review of a few of the hedge investment’s other gripes with Spark, centered on a presentation it provided to shareholders in might:
Too little rebranding and marketing strategy that is poor.
Osmium said in its presentation that Spark has neglected to rebrand JDate, which, along side Christian Mingle, has accounted for 95percent regarding the organization’s income since its inception 17 years back. Spark just got around to rebranding JDate in this present year’s very first quarter, as well as its Chairman and CEO Greg Liberman also conceded for this failure on its first quarter 2014 earnings call, where it reported its slowest customer numbers since 2006.
In addition, the advertising for the JDate rebranding, as well as for Christian Mingle, has fallen brief additionally the organization’s paying for these endeavors has already established repercussions that are dire based on Osmium.
“Spark’s ‘media strategy’ is a unverified and distraction that is immaterial the business’s core, high-margin premium dating company,” Osmium had written in its presentation. “These interruptions beyond your scalable core company have generated $29.4 million in fixed overhead supported by simply $69 million in income. This has led to Spark earning cash per worker this is certainly 71% less than rivals Match.com, eHarmony 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 standard dating website solutions 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 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 earnings telephone calls explaining the business’s outcomes during the last eight quarters,” Osmium’s presentation states. “Over this time duration, the business has created over $32 million in net LOSSES вЂ” 30% of this market limit.”
Spark administration can be perhaps perhaps not placing its cash where its mouth is whenever it comes to spending into 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 expense to on their own, administration additionally the Board collectively obtain just 0.2percent for the business.”
Mariah Summers is a continuing business reporter for BuzzFeed News and is located in nyc. Summers reports on hospitality, travel and real-estate.