Spark Networks, owner of JDate, Christian Mingle, along with other dating sites, is dealing with an intense activist campaign because of 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 a few weeks, sources knowledgeable about the specific situation said, allowing the activist hedge investment to take solid control and force a sale associated with 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 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 exactly what it claims are Spark’s poor business governance, settlement issues, and declining 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.
At a per share price of approximately $5, a almost 50% decrease in under per year, industry 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 a definite match, listed here is a glance at a few of the hedge investment’s other gripes with Spark, considering a presentation it offered to shareholders 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 for the organization’s income since its inception 17 years back. Spark just got around to rebranding JDate in this present year’s very very first quarter, and its own Chairman and CEO Greg Liberman even conceded to the failure on its very very very first quarter 2014 earnings call, where it reported its slowest customer numbers since 2006.
In addition to this, the advertising associated with JDate rebranding, as well as for Christian Mingle, has fallen quick and also the organization’s paying for these endeavors has received serious repercussions, based on Osmium.
“Spark’s ‘media strategy’ is a unverified and immaterial distraction from the business’s core, high-margin premium dating company,” Osmium penned with its presentation. “These interruptions outside of the scalable core company have actually generated $29.4 million in fixed overhead supported by simply $69 million in income. This has lead 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 original dating internet site solutions of profile creation and use of a database. The hedge funded cited HowAboutWe for partners and “featured profiles” on OKCupid and eHarmony as types of brand 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 believe Mr. Liberman has utilized your message ‘pleased’ no fewer than 20 times on profits telephone phone calls explaining the business’s outcomes during 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 market limit.”
Spark administration normally 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, administration therefore the Board collectively have just 0.2percent for the business.”
Mariah Summers is business reporter for BuzzFeed Information and it is located in ny. Summers reports on hospitality, travel and real-estate.