Spark Networks Stock Up On Deal To Buy Dating App Zoosk For $255 Mln

(RTTNews) - Spark Networks SE's (LOV) shares gained around 9 percent in the extended trading on Thursday after the dating company announced a definitive agreement to acquire dating app Zoosk, Inc.

Under the deal terms, Spark will buy Zoosk's shares with a combination of cash and stock valuing the company at approximately $255 million.

Spark will issue 12.98 million American Depository Shares 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 shareholders, receipt of a permit authorizing the issuance of the ADSs, and the satisfaction of other customary closing conditions.

Given the timing of this transaction and other considerations, Spark's 2019 outlook is no longer consistent with earlier given preliminary 2019 guidance.

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.

The combination is expected to 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.

The company noted that approximately two-thirds of the combined company's revenue will be generated in North America.

Jeronimo Folgueira, Chief Executive Officer of Spark, said, " 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."

The existing Spark executive team will manage the combined company.

Upon the closing, Spark 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.

Spark shares closed Thursday's regular trading at $11.90, up 1.19 percent. In the after hours trading, shares gained 9.24 percent further to $13.