SAO PAULO (Reuters) – Brazilian fashion companies Arezzo and Grupo Soma said on Monday they had agreed a merger to form an entity with revenues of 12 billion reais ($2.42 billion) to be 54% controlled by Arezzo.
The companies, which will bring together more than 2,000 company-owned and franchised stores and 34 brands, will later choose the name of the new company, which will have Grupo Soma’s shareholders owning the remaining 46%.
The exchange ratio established in the agreement stipulates that Soma Group shareholders will receive 0.12 new Arezzo&Co shares for each Soma share they hold.
The new company will be headed by Alexandre Birman, the current CEO of Arezzo&Co.
The merger comes as Brazil’s fashion sector, which includes Lojas Renner, Guararapes and C&A, has seen increasing competition in recent years, with rising interest rates and the entrance of Chinese online fast-fashion retailer Shein in the country.
($1 = 4.9657 reais)
(Reporting by Alberto Alerigi Jr.; Writing by Steven Grattan; Editing by Louise Heavens)
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