Eve sees shares plunge as merger talks end
Shares in Eve Sleep have plunged by more than a third after it told shareholders that merger talks with fellow mattress in a box company Simba had broken down.
Shares dropped by 36% to 3.1p when trading resumed this morning.
‘The board of eve has decided that now is not the right time to pursue the potential merger and that it is more appropriate to focus on the eve rebuild plan. The board will continue to seek further acquisitive growth opportunities, in addition to its focus on driving organic growth, in order to support its focus on a path to profitability,’ it says.
It also warned that losses would be higher than expected thanks to competition in the sector and consumer confidence.
‘Overall trading has been more challenging than previously anticipated owing to the uncertain economic outlook and continuing low levels of consumer confidence. This economic backdrop combined with heavy discounting and promotional activity from our competitors has led the board to conclude that 2019 revenues are now likely to be in the range of £25m-£27m.
‘Management's focus on optimising overheads and operational costs has supported a stronger EBITDA performance, with first half losses 50% lower year-on-year. It is anticipated that the reduction in revenue expectations will have some flow throw to the EBITDA loss, though a substantial reduction year-on-year in H2 and for the full year is still expected.’