Mattress retailer Eve Sleep has confirmed it is in “very early stage discussions” with rival Simba over a potential merger.
The two retailers, which both operate online and deliver mattresses directly to consumers, have found difficulties in the increasingly consolidated sector in recent years.
Eve told investors on Monday that there is “no certainty” that the potential deal would succeed, or what the terms of any deal would be.
Eve, which launched on the London Stock Exchange’s junior AIM market in 2017, has now had its shares suspended on the index, until either discussions collapse or an admission document for the merger is submitted.
A deal would improve the buying power of the two firms and cut their costs as they both attempt to return to profitability.
The confirmation on Monday came after The Sunday Times revealed the two firms were in initial talks about a deal to shore up their finances.
Simba was forced to slash its valuation from £200 million to around £20 million in February to secure new growth funding.
Meanwhile, Eve has 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.
Last month, Eve revealed it slashed its losses over the first half of the year but warned investors that it expected to miss annual sales targets.
It reported a 50% decrease in losses to £5.9 million for the half-year to June 30 after it focused on its core markets.