Zoosk Spark Networks

1. Spark Networks Zoosk Acquisition

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Spark Networks SE is a leading global dating company with a portfolio of premium brands designed for singles seeking serious long-term relationships. Jul 07, 2021 The new service is currently available to all Zoosk iOS and Android app users in the US, UK, Canada, and Australia. For more information, please visit; Spark Live! The launch of Zoosk Live! Marks Spark Networks' initial step into the emerging social discovery sector. Social discovery is the business of connecting people with mutual.

March 21, 2019 5:25 PM EDT

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Spark Networks SE (NYSE: LOV), a leading global dating company, today announced its entry into a definitive agreement to acquire Zoosk, Inc. The combination will drive a meaningful increase in Spark's scale, with over one million monthly paying subscribers across the two platforms. Spark expects the transaction to drive meaningful margin expansion in 2020 and beyond.

'Zoosk is one of the strongest dating apps in the North American market, which comprises half of the $5 billion global online dating opportunity,' said Jeronimo Folgueira, Chief Executive Officer of Spark Networks SE. 'Similarly, North America has been a key strategic market for Spark, and the focal point for our growth initiatives. Our deal with Zoosk creates the second largest online dating platform in North America and the second largest publicly-listed dating company in the world. Over the past 18 months, our management team has successfully integrated acquisitions and developed new brands. As a result of these efforts, our brand portfolio now includes SilverSingles, which continues to exceed our expectations, and the Christian Mingle, Jdate and JSwipe brands, which have all shown significant improvement since they were acquired in late 2017. Our acquisition of Zoosk is the most transformative deal in our history, and we expect the transaction to immediately strengthen our position in the online dating market. With the increased scale that results from the combination, we see a clear path to profitability improvements and greater opportunity to invest in innovation and growth initiatives that will drive shareholder value.'

With the addition of Zoosk, Spark will more than double in size and the combined business will be considerably more valuable than the two stand-alone entities:

• Following the completion of its integration plans, Spark expects to drive significant Adjusted EBITDA margin expansion. In 2020, Spark expects Adjusted EBITDA to exceed $50 million.
• Approximately two-thirds of the combined company's revenue will be generated in North America, advancing Spark's goal of building a growing and profitable presence of scale in the world's largest dating market.

'We are excited to help create such a broad and powerful portfolio of brands that will address specific user needs in the dating market globally, while leveraging the best of both companies to create a world-class platform to serve customers across these brands,' said Steven McArthur, Zoosk's CEO, who will be joining the Board of Directors of Spark.

Transaction DetailsUnder the terms of the agreement, Spark will acquire 100% of Zoosk's shares with a combination of cash and stock valuing the company at approximately $255 million based on the closing price of Spark Networks SE stock on March 20, 2019.

Spark will issue 12.98 million American Depository Shares (ADSs) valued at approximately $150 million based on the closing price of Spark Networks SE stock of $11.53 on March 20, 2019. Additionally, Zoosk shareholders will receive net cash consideration of $95 million at closing and $10 million via a deferred cash payment in December 2020, which will be funded through a new $120 million senior secured debt facility.

The transaction is expected to close early in the third quarter of 2019, subject to the approval of Spark Networks SE shareholders, receipt of a permit authorizing the issuance of the ADSs, and the satisfaction of other customary closing conditions. Over 75% of Spark shareholders have committed to vote in favor of the transaction. The transaction was unanimously approved by both the Spark and Zoosk boards of directors.

Given the timing of this transaction and other considerations, Spark's 2019 outlook is no longer consistent with preliminary 2019 guidance provided on August 30, 2018 as part of Spark Networks First Half 2018 results. Spark is focused on completing the post-close merger integration work as efficiently as possible, and we believe our efforts will result in at least $50 million of Adjusted EBITDA in 2020.

Piper Jaffray & Co. is acting as exclusive financial advisor to Zoosk on the proposed transaction and Fenwick & West LLP serves as legal counsel to Zoosk. In addition, Piper Jaffray & Co. arranged staple financing for Zoosk. Morrison & Foerster LLP served as legal counsel to Spark.

Governance and StructureThe existing Spark Networks SE executive team will manage the combined company. Jeronimo Folgueira, will continue to serve as Chief Executive Officer, Robert O'Hare, as Chief Financial Officer, Michael Schrezenmaier as Chief Operating Officer, Ben Hoskins as Chief Technology Officer, Luciana Telles as Chief Marketing Officer, and Gitte Bendzulla as General Counsel. Spark's headquarters will remain in Berlin, Germany.

Upon the closing, Spark Networks SE will appoint Steven McArthur, Zoosk's CEO and Deepak Kamra, General Partner at Canaan Partners, Zoosk's largest shareholder, to Spark's Board of Directors.

Conference Call

Spark Networks SE will host a conference call at 8:00 AM Pacific Time (11:00 AM Eastern Time), on Friday March 22, 2019 to discuss the transaction. Following the prepared remarks, the call will include a question-and-answer session.

Toll Free: 1-877-705-6003Germany Toll Free: 0-800-182-0040Toll/International: 1-201-493-6725

Spark Networks will also host a webcast of the call, which will be accessible in the Investor Relations section of Spark Networks website at https://www.spark.net/investor-relations/home

A replay will be available approximately three hours after completion of the call, and will run until April 5, 2019.

Replay:

Toll Free: 1-844-512-2921Toll/International: 1-412-317-6671Passcode: 13689010

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Spark Networks Zoosk Acquisition