Spark Networks, owner of JDate, Christian Mingle, as well as other dating web sites, is dealing with a tough activist campaign because of the hedge investment Osmium Partners, that is seeking to unseat the board and force a purchase associated with company that is troubled.
If love is a battlefield, then Spark Networks, owner of JDate, Christian Mingle, and a number of 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 week that is next sources acquainted with the problem stated, allowing the activist hedge investment to take solid control and force a purchase of this business. Initially planned for June 17, Spark has delayed the meeting that is annual June 28, a move these sources stated is geared towards purchasing Spark more hours to rally investors to vote down Osmium’s proposal or preempt a forced sale by securing its very own buyout offer.
A representative for Spark, which trades underneath the “LOV” stock ticker, declined to comment beyond citing the company’s 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 corporate governance, settlement issues, and stock price that is declining. The hedge investment additionally alleges that Spark has mismanaged JDate, its “crown jewel,” and that its networks that are christian 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, the marketplace and investors seem to 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 few of the hedge investment’s other gripes with Spark, centered on a presentation it provided to shareholders in might:
A lack of 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, and its own Chairman and CEO Greg Liberman also conceded to this failure on its very very first quarter 2014 earnings call, where it reported its slowest customer figures since 2006.
In addition to this, the advertising for the JDate rebranding, as well as for Christian Mingle, has fallen brief as well as the organization’s paying for these endeavors has had serious repercussions, relating to Osmium.
“Spark’s ‘media strategy’ is an unverified and distraction that is immaterial the business’s core, high-margin premium dating business,” 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 income. This has resulted in Spark earning cash per worker this is certainly 71% less than competitors Match.com, eHarmony and Zoosk.”
Failure to innovate.
Osmium additionally claims that Spark has neglected to innovate and remain competitive farmersonly sign in 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 types of brand name add-ons that have strengthened profitability at these websites.
Management this is certainly “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 think Mr. Liberman has used your message ‘pleased’ no fewer than 20 times on profits telephone telephone telephone calls explaining the business’s outcomes during the last eight quarters,” Osmium’s presentation states. “Over this time around duration, the organization has created over $32 million in net LOSSES вЂ” 30% regarding the market limit.”
Spark administration can also be perhaps maybe perhaps not putting its cash where its lips is when it comes down to spending into the business.
“Management and Board have actually restricted money at an increased risk in outright stock ownership,” Osmium stated. “Excluding commodity they received at no real expense to on their own, administration and also the Board collectively have just 0.2percent for the business.”
Mariah Summers is a continuing company reporter for BuzzFeed Information and it is located in nyc. Summers reports on hospitality, travel and estate that is real.