São Paulo Cade (Administrative Council for Economic Defense) approved without restrictions this Wednesday (14) the corporate reorganization of Azzas 2154, which will separate its brands under the umbrella of Arezzo&Co and Soma.
The operation undoes the merger between the two companies, which Cade approved in March 2024 and which gave rise to Azzas. Arezzo&Co will be controlled by the Birman family, with Alexandre Birman as leader, and Soma will return to the control of the Jatahy family, with businessman Roberto Jatahy heading the business.
According to the design established in the agreement between the two main partners, Arezzo&Co will own the footwear and handbag brands Arezzo, Schutz, Anacapri, Alexandre Birman, Vans, Vicenza, Paris Texas and Brizza, in addition to Carol Bassi, the ZZ Mall marketplace and Hering — which was acquired in a billion-dollar deal by the Soma group in 2021 and will now change control.
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Soma resumes the brands Animale, Cris Barros, Maria Filó, NV, Foxton, Reserva (with Oficina, Reserva Mini, Reserva Ink and Reserva Go) and Off Premium.
Farm Rio, seen by the market as the brand with the greatest sales potential, will be transferred to a new company, with its own management and governance, bringing together Farm Brasil, Farm Internacional and Fábula.
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In this new redesign of Farm, Arezzo will have 57.4% of the business, and Soma, 42.6%. The companies believe that the design will guarantee more flexibility for brand management and possible future sales.
According to the initial notification form, presented less than a month ago, the separation will occur in three stages, the first being the separation of the brands into two blocks, with the transformation of Azzas into Arezzo&Co, the separation of Soma and the creation of a new company for Farm.
Azzas will then carry out a partial spin-off, transferring Soma's shares to its shareholders in the same proportion as they have today. Finally, the two blocks will exchange shares with each other.
The idea is that, at the end of the process, the Birman block will have 32.1% of Arezzo&Co and 6.1% of Soma. The Jatahy block will sell its entire stake in Arezzo&Co to the Birmans and will remain solely in Soma, with 25.9% of the capital. The remaining shareholders will have 67.8% of each company.
Today, the Birmans hold 21.1% of Azzas, the Jatahys 10.2% and another 2.9% belong to Marcello Ribeiro Barros and Kátia Ferreira de Barros, founders of Farm.
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There is no price paid for the exchange of shares, according to the companies, and the operation is neutral for minority shareholders, who will not suffer dilution. The company's market value is estimated at R$5.2 billion.
The completion of the spin-off still depends on Soma's return registration to the group of publicly-held companies at the CVM (Securities Commission) and the approval of the listing of its shares on B3's Novo Mercado.
In the analysis, Cade's General Superintendence concluded that the reorganization will imply an "economic deconcentration". As Azzas was already part of the economic groups of the two blocks, all competitive relationships between the brands already existed before the operation.
According to the companies' estimates, their combined share was already below 20% in the clothing and accessories, footwear and fashion marketplaces markets.
The separation comes at a time of poor results in the Azzas group and the end of a long internal dispute between Jatahy and Birman. In the second quarter, the company had recurring net profit of R$106.5 million, a drop of 62.5% year-on-year, while net revenue fell 8.2%, to R$2.66 billion.
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The failure of the merger resulted from differences in the style of managing companies between the two main partners and, mainly, the way they observe fashion retail.
"After a period of different views on the company's corporate structure, governance and strategic paths, the reference shareholders reached a solution that preserves the built value, ends existing controversies and creates conditions for each set of businesses to fully develop their potential", Azzas said in a statement at the beginning of September, when it detailed the group's split.
The dispute between the partners reached the courts amid the fight over the Reserva brand. In this split process, Jatahy and Birman chose to terminate an arbitration process and a precautionary measure between them, in addition to committing not to enter into new legal proceedings regarding facts prior to the operation.
X-RAY | AZZAS 2154
