Eve Sleep and Simba merger called off
The two mattress businesses ended their courtship, with Eve revealing sales are falling and Simba saying it was now profitable in the UK.
The planned merger between online mattress store rivals Eve Sleep and Simba will not go ahead, the companies have said.
Last month Eve confirmed it was in discussions about a potential deal with Simba but on Friday bosses at the former said they had “decided that now is not the right time to pursue the potential merger”.
The company added that “it is more appropriate to focus on the Eve rebuild plan… overall trading has been more challenging than previously anticipated owing to the uncertain economic outlook and continuing low levels of consumer confidence”.
In contrast, Simba suggested it no longer needed a new partner in Eve, revealing the company is now operationally profitable in the UK – something bosses had previously thought would happen sooner with a merger.
Steve Reid, Simba chief executive, said: “Simba has transformed its business in the last nine months, cementing our position as Europe’s favourite mattress brand.
“Globally, our partnership with Sleep Country Canada continues to be a success, with a further collaboration confirmed in China through The Beast offline stores. We remain focused on achieving bottom line profitability and business efficiency.”
Both companies updated the market on current trading as they announced the end of their courtship.
Eve revealed overall trading has been difficult because of the “economic backdrop combined with heavy discounting and promotional activity”, adding sales in 2019 are expected to be between £25 million and £27 million.
The company added that losses are still expected to be reduced due to “optimising overheads and operational costs”.
Shares had been suspended following confirmation of the talks with Simba but were readmitted for trading on Friday morning.
At Simba, bosses said they were finally operationally profitable in the UK market, with 4% of the UK mattress market.
Around 750,000 sleep tech products have been sold since the business was launched, and its busiest day to date was the August bank holiday, with sales of £2 million, the company said.
Bosses also completed a £10 million fundraiser.
Both businesses have struggled previously in a tough market. Simba was forced to slash its valuation from £200 million to around £20 million in February to secure new growth funding.
Meanwhile, Eve had seen its share value slide due to an over-expansion in Europe after floating on a £140 million valuation. It is now valued at around £13 million.
In January, chief executive James Sturrock tapped investors for £12 million in funding to refocus on the UK, Ireland and France.