A two-year affair between two online dating services appears to be over, with reports Germany’s eDarling has bought back its shares from US partner eHarmony.
It’s probably not the exit eDarling‘s founders David Khalil and Lukas Brosseder (later joined by Christian Vollmann) hoped for when, with the backing of the Samwer brothers’ Rocket Internet, they started a copycat of eHarmony in Germany in 2008.
Less than two years later, eHarmony – at the time led by Greg Waldorf – purchased a 30 per cent stake in eDarling with an option to buy the rest if all went well.
Now, according to German online magazine Gründerszene, that offer is firmly off the table and eDarling has bought back its shares from eHarmony. An official statement from either company is yet to emerge but rumours put the cost of the buyback at $30 million with talk it will be followed by an eDarling launch in the UK.
At least until now, the two countries have avoided geographic competition: eDarling has expanded to a total 17 European countries plus Mexico and Chile; eHarmony is active mostly in the US, UK, Canada, Australia and Brazil (it also advertises for a wide range of other countries on its website).
Landgrabs are rarely profitable in the short-term. The company behind eDarling, Affinitas, recently reported a €9.2 million loss for 2011, an improvement on the €13.6 million loss it reported for 2010. In May last year, it said it expected slightly positive EBITDA on a boosted €50m turnover for 2012 – Khalil declined to confirm in December whether or not that target would be met.
Why the buyback – and why now?
About a year ago, eHarmony’s CEO-at-the-time Jeremy Verba said he was “very happy” with eDarling’s progress. Verba, however, is no longer at the helm: in July last year, shortly after his visit to Berlin, he left due to a disagreement over strategy, with founder and chairman Neil Clark Warren returning as his replacement.
There’s been quite a shake-up since then. Since taking up the role, Warren has led the company to cut its overall workforce from 260 employees one year ago to 160 today. In the last three years, he told the Los Angeles Times in December last year, new memberships, retention rates and time spent on the site were all down.
It’s unclear who led the break-up deal between eDarling and eHarmony – but it seems both firms were more than ready for a refresh in strategy.
lovers: Flickr user ClickFlashPhotos / Nicki Varkevisser
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