Spark Networks, owner of JDate, Christian Mingle, as well as other dating web sites, is dealing with a tough activist campaign by the hedge investment Osmium Partners, which will be trying to unseat the board and force a sale regarding the distressed company.
If love is really a battlefield, then Spark Networks, owner of JDate, Christian Mingle, and a small number of other niche internet dating sites, is all about to have its heart broken.
Osmium Partners is practically specific to win the four board seats it is gunning for when Spark holds its yearly shareholder conference week that is next sources knowledgeable about the problem stated, allowing the activist hedge fund to seize control and force a purchase associated with the business. Initially planned for June 17, Spark has delayed the meeting that is annual 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 its 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 exactly just just what it claims are Spark’s bad business governance, compensation issues, and stock price that is declining. The hedge investment additionally alleges that Spark has mismanaged JDate, its “crown jewel,” and that its Christian systems have been underperforming in accordance with their online dating sites peers.
At a per share price of around $5, a nearly 50% decrease within just per year, the marketplace and investors may actually have fallen out from love with “LOV.” As Osmium waits to see whether voters will think its four board nominees certainly are a match, here is a review of a few of the hedge investment’s other gripes with Spark, centered on a presentation it offered to investors in might:
Too little rebranding and bad online strategy.
Osmium stated in its presentation that Spark has neglected to rebrand JDate, which, along side Christian Mingle, has accounted for 95percent for the organization’s income since its inception 17 years back. Spark just got around to rebranding JDate in this current year’s first quarter, and its own 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 therefore the business’s paying for these endeavors has received repercussions that are dire relating to Osmium.
“Spark’s ‘media strategy’ is a unverified and immaterial distraction from the business’s core, high-margin premium dating business,” Osmium published with its presentation. “These interruptions outside of the 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 creation of “add-ons,” or features beyond the original site that is dating of profile creation and use of a database. The hedge funded cited HowAboutWe for partners and “featured profiles” on OKCupid and eHarmony 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 in terms of the company’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 sugardaddyforme.com over the past 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 limit.”
Spark administration can be perhaps maybe perhaps not placing its cash where its lips occurs when it comes down to spending when you look at the business.
“Management and Board have actually restricted money at an increased risk in outright stock ownership,” Osmium claimed. “Excluding investment they received at no real expense to by themselves, administration additionally the Board collectively obtain just 0.2percent for the business.”
Mariah Summers is just business reporter for BuzzFeed Information and it is situated in ny. Summers states on hospitality, travel and real-estate.