Spark Networks, owner of JDate, Christian Mingle, as well as other dating internet sites, is dealing with a intense activist campaign because of the hedge investment Osmium Partners, which can be trying to unseat the board and force a purchase of this company that is troubled.
If love is really a battlefield, then Spark Networks, owner of JDate, Christian Mingle, and a few other niche internet dating sites, is mostly about to obtain its heart broken.
Osmium Partners is nearly specific to win the four board seats it is gunning for when Spark holds its yearly shareholder conference in a few days, sources knowledgeable about the problem stated, allowing the activist hedge investment to take close control and force a purchase regarding the company. Initially planned for June 17, Spark has recently delayed the meeting that is annual June 28, a move these sources stated is geared towards purchasing Spark additional time to rally investors to vote down Osmium’s proposal or preempt a forced sale by securing a unique buyout offer.
A representative for Spark, which trades beneath the «LOV» stock ticker, declined to comment beyond citing the business’s public filings.
Osmium, which owns 15% of Spark, launched its proxy battle in December 2013, citing just just exactly what it claims are Spark’s bad business governance, payment issues, and stock price that is declining. The hedge investment additionally alleges that Spark has mismanaged JDate, its «crown jewel,» and therefore its Christian systems have actually been underperforming relative to their online dating sites peers.
At a per share price of around $5, a almost 50% decrease within just a 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 are a definite match, here is a review of a number of the hedge investment’s other gripes with Spark, centered on a presentation it provided to investors in May:
Too little rebranding and marketing strategy that is poor.
Osmium stated in its presentation that Spark has neglected to rebrand JDate, which, along side Christian Mingle, has taken into account 95percent of this 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 even conceded for this failure on its very very first quarter 2014 earnings call, where it reported its subscriber numbers that are slowest since 2006.
In addition, the advertising for the JDate rebranding, as well as Christian Mingle, has fallen quick while the business’s shelling out for these endeavors has already established serious repercussions, in accordance with Osmium.
«Spark’s ‘media strategy’ can be an unverified and immaterial distraction from the business’s core, high-margin premium dating company,» Osmium penned with its presentation. «These interruptions away from core that is scalable have actually resulted in $29.4 million in fixed overhead supported by simply $69 million in revenue. 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 also 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 business’s financials.
«We think Mr. Liberman has utilized your message ‘pleased’ no fewer than 20 times on profits phone telephone phone calls describing the company’s outcomes during the last eight quarters,» Osmium’s presentation states. «Over this time around period, the business has produced over $32 million in net LOSSES вЂ” 30% associated with current market limit.»
Spark administration can also be maybe perhaps not placing its cash where its lips is whenever it comes down to spending into the business.
«Management and Board have actually restricted money at an increased risk in outright stock ownership,» Osmium claimed. «Excluding commodity they received at no real expense to on their own, management as well as the Board collectively obtain just 0.2percent of this business.»
Mariah Summers is just a continuing company reporter for BuzzFeed Information and it is situated in brand new York. Summers reports on hospitality, travel and real-estate.