SAO PAULO, April 19 (Reuters) - Brazilian pet product retailers Petz and Cobasi have reached an agreement to merge operations in a cash and share swap deal that would create the country's largest player in the sector, according to a securities filing on Friday.
Under the agreement, the combined company, which would bring together the two largest pet retailers in Brazil, would be owned 50% by Petz shareholders and 50% by Cobasi shareholders.
Both companies have signed a non binding memorandum of understandings to move the deal forward, which includes a exclusivity agreement saying neither can negotiate a similar transaction with other players in the meantime.
Petz said in the filing that the deal would bring together companies with similar management models and strategic orientation, while combining the businesses would strengthen the omnichannel operation, generate scale gains and enhance commercial strategy.
The deal would value Petz at 7.10 reais ($1.35) per share, more than double its closing price of 3.50 reais on Thursday, and would also include Cobasi paying 450 million reais in cash to Petz shareholders, according to the memorandum.
The combined company could generate gross revenue of 6.9 billion reais and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of 464 million reais based on data from 2023, Petz said. The group would own 483 stores in Brazil, it added.
Cobasi founder Paulo Nassar will be appointed as Chief Executive of the combined group, while Petz CEO Sergio Zimerman will be nominated as Chairman, according to a Petz presentation.
Petz said details of the deal, including the percentage of the combined company each shareholder base would get, could still be adjusted.
The deal depends on a definitive agreement and approval from Brazil's antitrust regulator.
The agreement between the companies was first reported by local news outlet Brazil Journal. ($1 = 5.2417 reais) (Reporting by Andre Romani; Editing by Steven Grattan, Kirsten Donovan)
