Spark Networks, owner of JDate, Christian Mingle, as well as other dating sites, is dealing with a tough activist campaign by the hedge investment Osmium Partners, that will be seeking to unseat the board and force a purchase regarding the difficult business.
If love is really a battlefield, then Spark Networks, owner of JDate, Christian Mingle, and a few other niche internet dating sites, is all 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 specific situation stated, allowing the activist hedge investment to seize control and force a purchase for the business. Initially scheduled for June 17, Spark has recently delayed the yearly conference until June 28, a move these sources said is directed at 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 agent for Spark, which trades beneath 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 just what it claims are Spark's bad business governance, settlement issues, and decreasing stock cost. The hedge investment also alleges that Spark has mismanaged JDate, its "crown jewel," and that its Christian companies have actually been underperforming in accordance with their online dating sites peers.
The market and shareholders may actually have actually fallen right out of love with "LOV. at a per share price of approximately $5, a almost 50% decrease within just a year" As Osmium waits to see whether voters will think its four board nominees are really a match, here is a glance at a few of the hedge investment's other gripes with Spark, predicated on a presentation it provided to investors in might:
Too little rebranding and marketing strategy that is poor.
Osmium stated in its presentation that Spark has neglected to rebrand JDate, which, along with Christian Mingle, has accounted for 95percent associated with organization's income since its inception 17 years back. Spark just got around to rebranding JDate in this current year's very very first quarter, and its particular Chairman and CEO Greg Liberman also conceded for this failure on its very first quarter 2014 earnings call, where it reported its slowest customer figures since 2006.
In addition, the advertising associated with the JDate rebranding, as well as Christian Mingle, has fallen quick plus the organization's shelling out for these endeavors has already established repercussions that are dire relating to Osmium.
"Spark's 'media strategy' is a unproven and immaterial distraction from the business's core, high-margin premium dating company," Osmium published in 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 income. This has lead to Spark earning cash per employee that is 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 site that is dating of profile creation and use of a database. The hedge funded cited HowAboutWe for Couples and "featured profiles" on eHarmony and OKCupid as samples 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 in terms of the business's financials.
"We think Mr. Liberman has utilized your message 'pleased' no fewer than 20 times on profits phone calls explaining the business's outcomes throughout the last eight quarters," Osmium's presentation states. "Over this time around duration, the organization has produced over $32 million in net LOSSES вЂ” 30% associated with market limit."
Spark administration can be perhaps perhaps not placing its cash where its lips is whenever it comes down to investing when you look at the business.
"Management and Board don't have a lot of money at an increased risk in outright stock ownership," Osmium claimed. "Excluding commodity they received at no real price to by themselves, management therefore the Board collectively obtain just 0.2percent of this Company."
Mariah Summers is just company reporter for BuzzFeed Information and it is situated in ny. Summers reports on hospitality, travel and estate that is real.