Arezzo and owners of Hering and Farm seal deal to create R$12 billion fashion giant

Arezzo & Co and Grupo Soma sealed the agreement to form a fashion retail giant. The merger of the two businesses will form a company that could reach R$12 billion in market value. The decision was taken this Sunday, 4.

Sources linked to the companies interviewed by the report, on condition of anonymity, said that after sealing the deal, the two companies decided that they will officially announce the merger on the morning of Monday, 5th, before the opening of negotiations on the companies' shares on the Stock Exchange. Values, around 6 am.

With the merger, the new business will be responsible for 22 brands. On the Arezzo side, there are brands such as Vans, Alexandre Birman and Schutz. By Grupo Soma, Hering, Farm, Animale and others.

The expectation is that the executives of the two companies will release a joint note commenting on the birth of the new venture. This is the second time that the two businesses have sought an agreement to merge operations.

Dating between business

Talks about the merger began in 2021, but lost traction over time, according to financial market interlocutors. In recent weeks, conversations have gained strength again, in part, on the initiative of Arezzo, according to sources linked to the business.

With rumors of a merger, at the beginning of the week, Grupo Soma confirmed, in a statement sent to the Securities and Exchange Commission (CVM), that it was in talks with the competitor.

According to the document, the possible association may be through the joining of their operations and shareholder bases, involving the shares of the respective companies and the shared governance of the combined business.

Arezzo also issued a statement on the matter during the week. “The company is in agreement with Grupo Soma in which both are evaluating a possible association that could involve the unification of the shareholder bases into a single company with shared governance”, says the text

The possible union of businesses was positively received by the financial market. After the news about the merger was released, Soma's shares rose more than 16%, and Arezzo's, more than 12%, highlighting investors' optimism with the movement in the fashion sector.

Difficulties in the sector

In the opinion of FGV's retail professor, Ulysses Reis, the decision to unite the two groups occurs as a reflection of factors such as the difficulties in the fashion sector, the drop in the market value of companies separately and also the arrival of new businesses such as giants Asians. “It’s a surprising merger”, says the expert.

According to Reis, the merger of Arezzo and Soma follows the example of other large fashion groups abroad that joined forces to strengthen the business.

For the specialist, seeking synergies between brands focused on such different audiences, or brands that compete with each other, could be a point of attention for the company. “They will need to carefully evaluate the brand catalog of both groups”, he analyzes. “Bringing together two businesses of this size is not simple,” he adds.