Spark Networks, owner of JDate, Christian Mingle, along with other dating sites, is dealing with a tough activist campaign by the hedge fund Osmium Partners, that will be trying to unseat the board and force a purchase regarding the difficult company.
Osmium Partners is practically particular 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 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 directed at buying Spark additional time to rally investors to vote down Osmium’s proposal or preempt a forced sale by securing a unique buyout offer.
A agent for Spark, which trades underneath the “LOV” stock ticker, declined to comment beyond citing the business’s public filings.
Osmium, which has 15percent of Spark, established its proxy battle in December 2013, citing just exactly what it claims are Spark’s bad business governance, settlement issues, and decreasing stock cost. The hedge investment https://hookupdates.net/thaifriendly-review/ additionally alleges that Spark has mismanaged JDate, its “crown jewel,” and therefore its Christian companies have been underperforming in accordance with their internet dating peers.
The market and shareholders may actually have actually fallen out from love with “LOV. at a per share price of around $5, a almost 50% decrease within just per year” As Osmium waits to see whether voters will think its four board nominees really are a match, listed here is a glance at a number of the hedge investment’s other gripes with Spark, predicated on a presentation it provided to investors in May:
Osmium stated in 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 first quarter, and its own Chairman and CEO Greg Liberman also conceded for this failure on its very first quarter 2014 earnings call, where it reported its subscriber numbers that are slowest since 2006.
In addition, the advertising regarding the JDate rebranding, as well as Christian Mingle, has fallen quick plus the organization’s paying for these endeavors has received repercussions that are dire relating to Osmium.
“Spark’s ‘media strategy’ can be a unproven and distraction that is immaterial the Company’s core, high-margin premium dating company,” Osmium published 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 revenue that is generating worker that is 71% less than rivals Match.com, eHarmony and Zoosk.”
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 OKCupid and eHarmony as types of brand name add-ons which have strengthened profitability at these websites.
Despite profits misses and a stock that is declining, Osmium contends that Spark’s administration is delusional regarding the business’s financials.
“We think Mr. Liberman has utilized your message ‘pleased’ no fewer than 20 times on profits phone telephone telephone calls explaining the business’s outcomes throughout the last eight quarters,” Osmium’s presentation states. “Over this time around duration, the organization has generated over $32 million in net LOSSES вЂ” 30% associated with the market limit.”
Spark administration normally maybe maybe not placing its cash where its lips is whenever it comes down to spending within the business.
“Management and Board don’t have a lot of money at an increased risk in outright stock ownership,” Osmium reported. “Excluding commodity they received at no true price to by themselves, administration plus the Board collectively possess just 0.2percent associated with the Company.”
Mariah Summers is company reporter for BuzzFeed Information and it is situated in nyc. Summers states on hospitality, travel and property.