Brazil fashion companies Arezzo, Soma agree merger

Credit: REUTERS/Ricardo Moraes

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SAO PAULO, Feb 5 (Reuters) - Brazilian fashion companies ArezzoARZZ3.SA and Grupo Soma SOMA3.SA 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 LREN3.SA, Guararapes GUAR3.SA and C&A CEAB3.SA, 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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