Eve Sleep plc: Proposed Placing and Approval of a waiver of Rule 9 of the Takeover Code

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Eve Sleep plc (EVE) 
Eve Sleep plc: Proposed Placing and Approval of a waiver of Rule 9 of the 
Takeover Code 
 
23-Jan-2019 / 07:00 GMT/BST 
Dissemination of a Regulatory Announcement that contains inside information 
according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group. 
The issuer is solely responsible for the content of this announcement. 
 
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE MARKET 
            ABUSE REGULATION (EU) NO. 596/2014. 
 
 THE INFORMATION CONTAINED IN THIS ANNOUNCEMENT IS RESTRICTED AND IS NOT FOR 
      PUBLICATION, RELEASE OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR 
INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA, ANY PROVINCE OF CANADA, 
  AUSTRALIA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR NEW ZEALAND OR ANY OTHER 
    JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE 
            UNLAWFUL. 
 
 Terms used in this announcement have been defined in Appendix III or in the 
            text below 
 
      eve Sleep plc 
 
      ("eve", the "Company" or the "Group") 
 
Proposed Placing of 120,317,323 Ordinary Shares at 10 pence per new Ordinary 
      Share to 
 
     raise approximately GBP12.0 million (before expenses) 
 
      Approval of a waiver of Rule 9 of the Takeover Code 
 
      and 
 
     GBP0.9 million media for equity arrangement 
 
            Introduction 
 
  eve Sleep plc (AIM: EVE), a sleep brand focussed on UK&I and France, today 
   announces a conditional placing of 120,317,323 new ordinary shares of 0.1 
     pence each ("Ordinary Shares") in the share capital of the Company (the 
    "Placing Shares") at a price of 10 pence per Placing Share (the "Placing 
Price") to raise approximately GBP12.0 million before expenses (the "Placing") 
   from existing and new investors. In addition Channel Four, which provides 
     advertising services to the Company and is an existing Shareholder, has 
    agreed that GBP0.9 million of future advertising spend by the Company with 
  Channel Four will, when payable, be satisfied by the issue of new Ordinary 
  Shares at the Placing Price over a period of up to twenty four months from 
  Admission . The Placing is conditional upon the passing of the Resolutions 
     set out in the Notice of General Meeting included in the Circular to be 
     distributed to Shareholders on or around the date of this Announcement. 
 
   The Placing Shares represent approximately 86.1 per cent. of the existing 
 share capital of the Company. Following the Placing, the Company's enlarged 
          share capital will be 260,052,484 Ordinary Shares ("Enlarged Share 
 Capital"). The Placing Shares represent approximately 46.3 per cent. of the 
  Enlarged Share Capital. The Placing Price represents a discount of 3.6 per 
 cent. to the closing mid-market price of 10.375 pence per existing Ordinary 
    Share on 22 January 2019, being the latest practicable date prior to the 
 publication of this Announcement. The Placing Shares, when issued and fully 
paid, will rank pari passu in all respects with the Existing Ordinary Shares 
    and will rank for all dividends or other distributions declared, made or 
            paid after the date of issue of the Placing Shares. 
 
 Woodford, which is a key investor in the Placing, is deemed to be acting in 
    concert with any investment funds discretionary managed by it (including 
 each of the Woodford Funds). As such Woodford is deemed to be interested in 
      the aggregate shares in the Company held by the Woodford Funds for the 
   purposes of the Takeover Code. Woodford (and any person acting in concert 
  with it) is currently a beneficial holder of approximately 29.90 per cent. 
 of the Company's current issued share capital. Woodford, in its capacity as 
        discretionary investment manager, acting on behalf of certain of its 
     investment fund clients, has agreed to subscribe for 80,000,000 Placing 
   Shares, being an amount that would increase the percentage holding of the 
           Company of Woodford (and those persons acting in concert with it) 
   immediately following completion of the Placing to 46.83 per cent. of the 
   Company's Enlarged Share Capital. The Panel has agreed to a waiver of the 
    obligations under Rule 9 of the Takeover Code (commonly referred to as a 
  "Whitewash"), subject to the Whitewash Resolution being approved on a poll 
at the General Meeting by Independent Shareholders who hold, in aggregate, a 
   simple majority of the votes cast on the Independent Shares. Without such 
       waiver, Woodford (and any persons acting in concert with it) would be 
obliged to make a general offer to Shareholders under Rule 9 of the Takeover 
Code. The Placing is conditional on the Whitewash Resolution being passed by 
            the relevant majority of Independent Shareholders. 
 
   The VCT Placing Shares will be allotted and unconditionally issued before 
the other Placing Shares (the latter being allotted and issued conditionally 
     on Admission) to allow the VCT Placee to benefit from any potential tax 
  advantages that may be applicable pursuant to the rules of the VCT Scheme. 
   The VCT Placee has obtained its own independent advice in this regard and 
the Company has obtained no assurance from HMRC or any other person that any 
 VCT relief may be, is or will continue to be available to the VCT Placee or 
    any other person and the Company disclaims any and all liability in this 
            regard. 
 
     eve will shortly send a circular to Shareholders in connection with the 
       Placing ("Circular"). The Circular will contain a Notice of a General 
  Meeting, to be held at 10 a.m. on 11 February 2019, at the offices of Peel 
         Hunt LLP, Moor House, 120 London Wall, EC2Y 5ET, to approve certain 
            Resolutions necessary to implement the proposed Placing. 
 
            Background to and reasons for the Placing 
 
      On 15 November 2018, the Company announced the results of its business 
  review and a trading update, as well as stating its intention to raise new 
equity. The Company provided an update in respect of the planned fundraising 
            on 6 December 2018. 
 
       The net proceeds of the Placing (approximately GBP11.7 million) and the 
proposed Channel Four future advertising spend of GBP0.9 million (as described 
 in the paragraph entitled Future issues of Ordinary Shares for media spend) 
      will, in conjunction with existing cash resources (of approximately GBP6 
 million as at 31 December 2018[1]), be utilised by the Company to implement 
       its updated strategy as described in more detail below as well as for 
            general working capital purposes. 
 
            Updated strategy 
 
The purpose of the Placing is to enable the Company to implement its updated 
            strategy as announced on 15 November 2018. 
 
From 10 September 2018, following the appointment of James Sturrock as Chief 
 Executive Officer, the Board carried out a detailed review of the Company's 
business. The Company's updated strategy, which has been formulated in light 
     of this review, is to refocus on the core sleep markets of the UK&I and 
       France, which collectively are estimated to be worth approximately GBP6 
            billion per annum[2]. 
 
  The rationale for this re-focus is twofold. First, the UK&I and France are 
   among the biggest sleep markets in Europe.[3] Second, despite the Company 
   achieving growth across the rest of Europe in the first half of the year, 
the negative profit contribution from the Company trading in this region was 
            considered to be too great to justify continued investment. 
 
 Within the core markets of UK&I and France, the Board's revised strategy is 
   to transform eve from being a single product focused business to a repeat 
 purchase, multi-product sleep specialist, building on the Company's growing 
share of the mattress market. The Board believes that this updated strategy, 
    together with the funds raised in the Placing, will help drive continued 
      revenue growth and increase conversion. It is also expected that eve's 
     updated, more targeted marketing strategy will help lead to significant 
 improvements in unit economics. Such results are expected to be facilitated 
by the estimated c.40 per cent. increase in online market penetration of the 
            UK bedroom furniture market between 2018 and 2023.[4] 
 
Accordingly, the Company's updated strategy will focus on three core pillars 
   with the intention that the Company will further grow its share of the GBP6 
   billion bedroom market in UK&I and France resulting in revenue growth for 
the Company. The three core pillars are aimed at creating a clearer position 
for the Company in the wider sleep market with a wider bedroom product range 
  and an increased ability for cross-selling, by investing in technology and 
       digital teams to improve conversion and the Company's repeat purchase 
metrics, and by continued investment in a more effective return on marketing 
            spend. The three core pillars of the Company's strategy are: 
 
  · differentiated brand positioning - broadening the Company's current 
  position to become a trusted destination for a wider range of bedroom 
  products; 
 
  · expanded product range - focussing on carefully curated, design-led 
  ranges that will increase cross-selling and repeat purchases, whilst 
  continuing to deliver excellent product quality in the Company's mattress 
  range; and 
 
  · lower friction customer experience - building consumer trust in the 
  Company's products and services with a view to improving the conversion 
  rate. 
 
            The three pillars are described in more detail below. 
 
    The Company, with an estimated compound quarterly revenue growth rate of 
 c.17 per cent. between Q1 2016 and Q3 2018, aims to achieve further growth. 
    The Directors believe this revised strategy will drive improved customer 

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January 23, 2019 02:02 ET (07:02 GMT)