The companies discuss unifying ownership into a single company with shared governance; It should be noted, however, that there is no signed binding document
A Arezzo and the Soma Groupowner of the brands farm, Animal AND Here you are, returned to the negotiating table late last week. The idea is to create a giant group of fashionwith estimated synergies of R$4.5 billion for all brands involved.
Merger talks had begun in 2021, according to people familiar with the negotiations, but stalled and regained momentum in recent weeks at Arezzo’s initiative. So far there are no investment banks involved.
Soma confirmed in a statement to Securities and Exchange Commission (CVM) that there are conversations going on. According to the document, the possible association could take place “through the union of their activities and shareholder base, involving the shares of their respective companies and the shared governance of the combined companies”.
Alexandre Birman would be the president of the new company, while Roberto Jatahy would continue to lead the brands under Soma’s current management. The information was initially reported by Neofeed.
Arezzo also released a statement on the matter. “The company has agreed with Grupo Soma in which both are evaluating a possible association which could result in the unification of the shareholding structure into a single company with shared governance.”
The companies underline that to date there is no signed binding document and make it clear that the operation may not be confirmed.
According to a source, the transaction would be 100% stock, with no premium on the screen price. Under the terms, Arezzo would own just over 50% of the combined company and Soma the remainder.
The new stake would reach a market value of approximately R$11.8 billion, according to projections from Ativa Investimentos. For comparison, Lojas Renner has R$15.2 billion. After the news of the merger spread, Soma’s shares increased by more than 16% and those of Arezzo by more than 12%.
For Eduardo Yamashita, chief operating officer of Gouvêa Ecosystem, a consultancy firm specializing in retail, the potential merger presents synergy opportunities that can be seized in the short, medium and long term.
“The fashion segment is undergoing a period of restructuring on a global scale, driven by profound changes in consumer behavior, the entry of Asian players and a general increase in capital and operating costs,” he says.
Birman said this week at an event sponsored by UBS BB that the apparel sector is going through a period of consolidation. The Arezzo group, she explains, holds a 12% market share in men’s fashion and aims to gain space in the women’s segment.
In recent years, Birman’s company has purchased Reserve and Baw. Furthermore, in 2019, the Vans brand began to be licensed in Brazil. On Soma’s part, the most notable move was the purchase of Hering, in 2021.
In the third quarter of last year, Soma recorded revenues of R$1.5 billion and net profit of R$96 million. In the same period, Arezzo recorded a net turnover of R$1.6 billion and a recurring net profit of R$107 million.
Source: Terra
Ben Stock is a lifestyle journalist and author at Gossipify. He writes about topics such as health, wellness, travel, food and home decor. He provides practical advice and inspiration to improve well-being, keeps readers up to date with latest lifestyle news and trends, known for his engaging writing style, in-depth analysis and unique perspectives.
