Eve Sleep PLC (LON:EVE) has confirmed reports that it is in merger talks with rival mattress retailer Simba Ltd.
The Sunday Times reported that the two loss-making companies were looking to shore up their struggling businesses with a potential merger.
Eve Sleep said in a statement on Monday that it was in “very early stage” discussions with Simba for a potential deal. The group added that “there can be no certainty” that the talks will result in a deal.
A deal would improve the companies’ buying power and cut their costs as they attempt to return to profitability and turn around a collapse in their shares.
Simba was forced to cut its valuation to £20mln from £20mln in February to secure new funds. The firm generated sales of £28.4m in the year to September 2017, but has yet to post its results for last year.
Eve Sleep was worth £140mln when it floated in 2017 but its valuation now stands at £12.8mln after its overexpansion led to losses.
The company posted losses of £19.2mln on £34.8mln sales last year. In January, the group asked investors for £12mln to support its plans to refocus on the UK, Ireland and France.