New Hope-based dating site MeetMe gets hooked up with German firm for $500M

Owners of the EHarmony online dating service have agreed to buy New Hope-based Meet Group, its smartphone dating apps, and video and advertising software, for $500 million, or $6.30 a share.

Meet Group, which owns the MeetMe, Lovoo, Skout, Tagged and Growlr apps, among others, will become a U.S.-based arm of Munich, Germany-based NuCom’s Parship Group, a “matchmaking platform” that owns the EHarmony, Parship and Elite Partner dating apps, to form “a global leader in the online dating and social entertainment sector,” the companies said in a statement.

NuCom is a joint venture owned by German entertainment company ProSiebenSat.1 Media SE — which owns TV stations and reality-video shows in central Europe — and New York-based private-equity investor General Atlantic.

"This deal is all about growth,” said Meet Group chief executive and cofounder Geoff Cook. Instead of cutting jobs, “we are continuing to hire."

The company employs 337 worldwide, including about 200 at its New Hope and Philadelphia offices. Cook will stay on to run the group in coordination with Parship.

Together they have apps companion-seekers can use from their smartphones “if you’re looking for someone for the weekend, or a conversation partner, or your spouse,” Cook added. “We always believed in having a portfolio.”

The sale price is “a 25% premium” to Meet Group’s recent share value, double its expected 2020 sales, and ten times its expected earnings (not counting financial costs) -- a rich price, by recent media tech deal standards, noted Austin Moldow, analyst at Cannacord Genuity Capital Markets in New York.

The deal “will deliver certain and immediate value to our shareholders,” Meet Group chairman Spencer Rhodes said in a statement.

Indeed, the sale price is the most that the stock has been worth since the company went public after a 2011 merger with the Latin America-focused social-media network QuePasa — except for the last hour of trading on Wednesday afternoon, when the price spiked more than $1 to close at $6.82 a share.

That was after Reuters, citing unidentified sources, reported that the deal was imminent at a price of “more than $500 million.” Buyers who bought at the top in the ensuing rush of trades face a loss of up to 8 percent if the deal goes through as planned, pending Meet Group shareholder approval and U.S. and German regulatory OKs.

Cook cofounded the company originally known as MyYearbook in 2003, using the digital student guide his siblings Catherine and David set up to meet fellow students at Montgomery Township High School in Somerset County, New Jersey.

He said that the private-equity backers can better finance expansion than Meet Group could on its own.

Cook owns two million shares, according to the company’s most recent shareholder proxy statement, worth over $12 million at the sale price. Catherine heads the company’s U.S. marketing, and David works on a contract basis.

Cook wouldn’t comment on whether large investors had pressured him to sell, but noted that NuCom approached him about combining.

Adding Meet Group “will significantly advance our ambition to create one of the leading global players in online dating and interactive live video,” said Max Conze, chief executive at ProSiebenSat.1 Media SE. The combined companies will enjoy higher market share in the German live-video smartphone apps sector, he said in a statement.

“We continue to consolidate our position in the online-dating market” by adding Meet Group’s “social entertainment” to the EHarmony dating service and other brands, said Tim Schiffers, chief executive of the Parship Group. "I am looking forward to working with our new colleagues to solidify our international footprint.”

Philadelphia-based Morgan, Lewis & Bockius LLP and the Bank of America advised Meet Group in the sale.

Meet Group’s Lovoo, Skout, Tagged and Growlr apps were acquired since early investments by backers including Philadelphia-based First Round Capital.

The MeetMe app is designed to help users "meet new people,” Lovoo targets Western Europe, Tagged is focused on African Americans, and Growlr is focused on gay people.

First Round cofounder Josh Kopelman is chairman of the board of The Inquirer. A longtime First Round partner, Chris Fralic, is a Meet Group director.

The company added Flash-based games and the Lunch Money virtual currency in 2008 and the Meebo instant-messaging system in 2009. It bought Skout in 2016, and added If(we) and the German dating app Lovoo in 2017.

Meet Group has satellite offices in San Francisco, and in Dresden and Berlin, Germany.