Fashion Empire Azzas 2154 to Split Two Years After Failed Merger

Azzas 2154 SA, one of Brazil’s largest apparel exporters, will split into two independent publicly traded companies as its main shareholders seek to end a months-long dispute over governance and strategy.

The Sao Paulo-listed company was created about two years ago following a merger of Arezzo Industria e Comercio and Grupo de Moda Soma SA that combined nearly 30 fashion brands. Their two leaders Alexandre Birman and Roberto Jatahy have been publicly exposing their disagreements on how to run the business.

Under a binding agreement announced Wednesday, the Arezzo&Co business will become a standalone company, while Soma’s fashion brands will form a separate listed entity, with both companies retaining a stake in Farm Rio, the company’s crown jewel.

The restructuring marks a significant reversal of the strategy behind the merger, which brought some of Brazil’s best-known fashion brands under a single corporate structure. The combined company has struggled to integrate businesses with different operating models and strategic priorities, while disagreements between Birman and Jatahy escalated this year into court proceedings and arbitration.

The market reaction is positive “because it ends this drama,” said Marcos Peixoto, fund manager at XP Asset Management. “The outcome of the split was already expected, so there’s not much surprise, but the fact that it is out is positive,” he added.

Azzas 2154 shares jumped as much as 14 percent on Wednesday, the biggest intraday gain since May 2025. They’re still down about 32 percent for the year, versus an increase of 15 percent for the Ibovespa equities benchmark. Since the 2024 merger, the firm sred nearly 8 billion reais ($1.5 billion) in market value.

The reorganisation is intended to give each company a separate management structure, distinct business model and market focus, as well as independent access to capital markets and funding, according to Wednesday’s statement. The two main shareholders will divide control of the resulting businesses, with Birman’s bloc taking a 32.1 percent stake in Arezzo&Co and Jatahy’s bloc holding 25.95 percent of Soma.

Farm Rio will have both Birman and Jatahy as owners. The brand’s pieces, known for colorful prints sported by celebrities including Justin Bieber and Beyoncé, has long been one the group’s most valuable assets. Arezzo&Co will keep 57.4 percent of Farm Rio while Soma will have 42.6 percent. Co-founders Kátia Barros and Marcello Bastos will remain as the heads of the firm.

No separate transaction involving Farm Rio has been agreed beetween the shareholders yet, the company said. The new structure will allow both shareholder groups to retain exposure to Farm Rio while pursuing separate strategies for their other businesses, according to the statement.

Azzas’ split is expected to be completed in the first quarter of 2027, subject to corporate, regulatory and creditor approvals, including clearance from Brazil’s antitrust authority Cade, according to the statement.

By Leda Alvim and Rachel Gamarski

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