Cupid to sell dating assets and make staff redundant
Customers fall out of love with Canoodle site and turn to apps instead
CUPID is proposing to sell its remaining online dating assets for £3 million, make most of its 180 staff redundant and turn itself into an investment company.
The plan, which may see the online dating specialist change its name to Castle Street Investments, is subject to shareholder approval with a general meeting to be held in Edinburgh before Christmas.
However Cupid said 40.53 per cent of shareholders have already given irrevocable undertakings to vote in favour of the proposals.
The deal will see the company’s assets taken on by Tradax IP Licensing in the British Virgin Islands, Together Networks, based in Malta and Together Networks Holdings, which is incorporated in the British Virgin Islands.
It is understood all three of those businesses have common links and Cupid’s co-founder Max Polyakov, who left the Edinburgh company in 2011, is also involved with them.
The Cupid sites which are up for sale include Canoodle, LoveBeginsAt and Uniform Dating.
They brought in £7.2m of revenue in the six months to the end of June this year but recorded a £1.2m loss.
If the deal does not get approved the board warned there will be a phased “cessation” of the dating operations in order to stem the cash losses from the company.
Cupid also confirmed it has agreed a quicker schedule of payments for the casual dating assets it sold to Grendall, which is run by the Ukranian-born Mr Polyakov, in July last year.
That will see the AIM-listed company receive £12.5m by December next year compared with the £20m by November 2016 which was initially agreed.
Cupid launched a strategic review earlier this year and has admitted it has found the fast pace of change in the online dating sector, with the growing popularity of mobile apps such as Tinder, difficult to keep up with.
The board is recommending that shareholders back the plan.
George Elliott, chairman of Cupid, said: “After a number of fundamental changes in the dating market, we instigated a rapid strategic review of the dating business.
“The board believe that [this] announcement represents the solution which protects the best interests of shareholders, by providing much greater certainty over the group’s cash balances and deferred consideration and removing substantially all costs from the group.
“The company will effectively become a well capitalised cash shell with approximately £18m that can be utilised for new opportunities in line with our proposed investing policy or returned to shareholders.”
The proposal will see the company keep its office in Edinburgh but retain just seven staff including current chief executive Phil Gripton and chief financial officer Niall Stirling. Mr Gripton will continue to lead the business as an executive director with Mr Stirling becoming an executive director and company secretary.
Mr Elliot will remain as chairman while Bill Dobbie, the co-founder and largest individual shareholder, will also stay on as a non-executive director.
However Ian McCaig and Russell Shaw will leave their non-executive posts if the disposal goes through.
Only 24 of Cupid’s workforce are based in the UK with the majority in the Ukraine and some others in the United States and France.
Cupid has earmarked around £1.7m to meet the cost of closing
'The company will become a well capitalised cash shell with approximately £18million to use'
operations. It is not yet clear if any staff will be retained by the new owners should the dating assets disposal proceed.
If the transaction is agreed then Cupid said it intends to make a substantial return to its shareholders during 2014.
It will be prohibited from investing in the online dating sector for a period of two years.
In its outline investment policy Cupid said it may make a series of small investments or plough all its cash into one company but it would not plough money into firms which are making operating losses.
Cupid shares closed down 6.5p, or almost 25.5 per cent, yesterday at 19p.