Osmium Partners Demands Action At Spark Networks To Maximize Shareholder Value
1. On March 2, 2010, GHP, which currently holds a 48.7% voting stake in the Company, stated in a letter to the Board that “For the avoidance of doubt, please note that we have no interest in selling or otherwise disposing of any of our shares of common stock of the Company. In the event that any third party were to propose a competing transaction requiring a vote of the Company’s stockholders that the Company wished to pursue, we would oppose and vote against such competing transaction. ” We believe the purpose of the above quotation from GHP is to dissuade any other third party from making a competing bid. Thus, our suggestion is that the Special Committee consider keeping the company public and realize value through the changes outlined above.
2. Additionally, GHP’s letter stated, “Following consummation of the proposed transaction, we expect that the Company will continue to operate its business as currently conducted. We do not anticipate seeking changes in the Company’s management as a result of the transaction. ” Adam Berger, the CEO, and the management team have a duty of care and loyalty to the Company and all its shareholders. However, we are concerned about management’s long standing relationship with GHP and its vested interests in keeping their jobs and generous compensation packages. If another strategic acquirer were to purchase Spark, the management team would likely not be retained. As a result, we believe that the management team is confronted with a significant conflict of interest, and we are concerned that it may not pursue all possible transactions with equal vigor.
3. Subsequent to the filing of our 13D in March, several investors have contacted us to relate concerns about the current sale process after their conversations with Mr. Berger. For example, one investor had a call with Mr. Berger where he mentioned a public statement made by the CEO of OK Cupid (a competitor) suggesting that $3.10 was a generous offer for Spark. This investor told us that it was the first time he had ever heard a CEO talk down the value of his own company – much less during a publicly announced strategic review and rejected bid. We believe comments such as this by Mr. Berger demonstrate our concern that he may fail to honor his duty of loyalty and care to all Spark shareholders and are symptomatic of the conflict of interest inherent in Mr. Berger’s relationship with GHP.
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