By Brazil Stock Guide — Azzas 2154 announced a sweeping corporate reorganization on Wednesday that will effectively unwind the structure created by the merger of Arezzo&Co and Grupo Soma just over two years ago.
The company will be split into two independent publicly traded businesses — Arezzo&Co and Soma — while Farm Rio will be placed in a separate corporate structure jointly owned by the two groups.
The move stems from a binding agreement between the shareholder groups led by Alexandre Birman and Roberto Jatahy and brings to an end a period of disagreements over governance, corporate structure and the strategic direction of the company.
It marks a significant reversal of the strategy unveiled in 2024, when Arezzo and Soma combined their businesses to create what was billed as Latin America’s largest fashion-brand platform, with annual revenue of more than R$12 billion.
Now, the conglomerate is being broken apart again.
Birman gets Arezzo; Jatahy gets Soma
Under the new structure, Arezzo&Co will house the Shoes & Bags business — including Arezzo, Schutz, Anacapri, Alexandre Birman, Vans, Vicenza, Paris Texas and Brizza — as well as Hering, Carol Bassi and ZZ Mall.
Soma will include premium fashion brands Animale, Cris Barros, Maria Filó and NV, as well as Reserva and its extensions, Oficina, Foxton and Off Premium.
Both companies will be independently listed on the Novo Mercado, B3’s highest corporate-governance listing segment, and will have their own boards, management teams, capital structures, strategies, budgets and business plans.
The separation also formalizes a division of control between Azzas’ two main shareholder groups.
Following a share swap between the controlling blocs, Birman’s group will own 32.13% of Arezzo&Co and 6.18% of Soma. Jatahy’s group will hold 25.95% of Soma and will no longer own a stake in Arezzo&Co.
The free float will stand at 67.87% at both companies, excluding treasury shares.
Farm Rio sits in the middle
The most valuable — and potentially most strategic — asset in the reorganization is Farm Rio.
The brand will be placed in a dedicated company that will be 57.4% owned by Arezzo&Co and 42.6% by Soma, with its own management and governance structure.
At the same time, Azzas left the door open to a future transaction involving Farm.
The brand, which has expanded internationally and operates stores overseas, is widely seen as potentially the group’s most valuable asset, with some estimates suggesting it could be worth more than US$1 billion.
Arezzo&Co and Soma will continue to evaluate strategic alternatives for Farm Rio in a process advised by Morgan Stanley. Arezzo&Co will lead and coordinate the process, although any eventual sale will require approval from both sides.
The company stressed that no decision to sell Farm has been made and no binding agreement has been signed with any third party.
Shareholder dispute comes to an end
The agreement also formally ends the corporate dispute between Birman and Jatahy.
The two shareholder groups agreed to seek the termination of the ongoing arbitration proceeding and related injunction, and committed not to pursue litigation over matters arising before the completion of the reorganization.
That provision helps explain the scale of the overhaul.
Rather than trying to manage disagreements over governance, strategy and capital allocation within a single company, the two groups have decided to divide the assets and return to running largely independent business platforms.
Azzas itself acknowledged that its main shareholders had developed “different views” on the company’s corporate structure, governance and strategic direction.
The end of a two-year experiment
The Arezzo-Soma merger was unveiled in 2024 as a combination that would bring together dozens of brands, more than 2,000 stores and a fashion platform generating more than R$12 billion in annual revenue.
Just over two years later, the strategy is changing dramatically.
The new thesis is almost the opposite of the original one: less complexity, greater autonomy, faster decision-making and separate capital structures.
The market’s verdict on the merger had also been harsh. Azzas was recently valued at around R$3 billion, representing a decline of nearly 70% in market capitalization over roughly two years.
For minority shareholders, the company says there will be no dilution. Initially, each Azzas shareholder will receive shares in Soma and will hold the same percentage interest in both companies. The subsequent share swap will take place exclusively between the Birman and Jatahy shareholder groups.
Completion of the transaction remains subject to corporate and regulatory approvals, including clearance from CADE, Brazil’s antitrust authority, registration of the new publicly traded company, its admission to B3’s Novo Mercado segment, and required consents from creditors and contractual counterparties.
The shareholder groups expect the separation to be completed during the first quarter of 2027.
BTG Pactual acted as exclusive financial adviser to the Birman group, while G5 Partners advised the Jatahy group.
The transaction will effectively bring the current Azzas 2154 structure to an end — and represents a new attempt to unlock value by separating the very businesses that were brought together in 2024 under the promise of greater scale.
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