Brazil’s largest pet retail outlines integration roadmap following regulator clearance.
Pet retailers Petz and Cobasi are preparing for what the CEO of the combined company, Paulo Nassar, calls the most important moment in the history of both businesses. “It’s time to lay down our arms and march as one team. After all, we’re not just packing our bags together, we will have to transform ourselves,” he said, in his first interview since the merger was approved earlier this month.
Nassar discussed the next phases of the merger at a time when the market has grown far more wary of culture and business integrations in the sector, as difficulties faced by the Arezzo&Co-Soma merger have raised red flags across retail. He detailed plans for the organization’s first days, negotiations over the new executive team, and the outlook for 2026.
The CEO said a third retailer is interested in the 26 stores the company must divest in the state of São Paulo, as ordered by Brazil’s antitrust watchdog, CADE, as a condition for approving the merger—signaling strong competition for those regional assets. Ten of the 26 units are located in the city of São Paulo.
The company will operate under the new name Grupo Petz Cobasi and, as of January 5, will trade under a new stock ticker: Auau3 will replace Petz3. For Brazilians, “au au” is the onomatopoeia commonly used to represent the sound a dog makes — the equivalent of “woof woof” in English. Before that, on January 2, the transaction will reach its closing, as the two chains officially become one combined company.
In addition, by the end of the month, the group plans to hold a meeting with analysts, at which it will disclose the names of the new executive team, the composition of the board of directors, and updated synergy estimates. It has already been decided that the Petz and Cobasi brands will be maintained and will remain central to organic expansion plans.
Speaking to Valor, Nassar said he expects adjustments to the projected cost savings but believes EBITDA synergies should reach between R$200 million and R$300 million in five years, within the initially estimated range of up to R$330 million.
An integration team of 60 people — 30 from each company — formed in August last year, operated until May. The work was then put on hold when the case was referred to the antitrust regulator and is now resuming, with support from consultancy McKinsey.
“A software platform mapped 3,000 activities to define what we will do, how we will do it on day one, day 30, in the first 100 days, the first six months, and annually, and what we need to capture by the fifth year, when this process ends. There will be an update to the synergy figures, but I believe they will be in the R$200 million to R$300 million range,”
he said.
Auau3 replaces Petz3The size of the business
The choice of the Auau3 ticker — a more universal code, leaving behind the symbolism of just one of the businesses—reflects the spirit Nassar wants to convey to the market.
The CEO also said he has already decided on the names that will comprise the leadership team, which will combine executives from both chains after assessing 27 candidates from Petz and Cobasi, with support from consultancy Korn Ferry. He declined to disclose names before internal communication. Cobasi’s commercial and marketing director, Caio Bernardo, is expected to remain in the new company. He took part in the interview with Valor.
Nassar said he made the final decisions but shared them with the founder of Petz, Sergio Zimerman, who will serve as chairman. “I chose the names because that’s my prerogative, but I consulted Sergio, who gave me a lot of input, many opinions about his team, who’s who, and who I should consider,” he said.
This may signal a constructive relationship in a deal where the market has questioned how relations between shareholders will work. In other words, whether governance will function effectively.
According to an XP report published this month, past M&A integrations show that this is typically a turbulent transition period. Not even Raia and Drogasil, now RD Saúde, were spared such challenges, and at Azzas 2154 (Arezzo and Soma), differences in profiles and internal silos slowed the merger.
XP maintained a neutral rating on Petz shares, while taking a positive view on synergies.
“We expect the pace of earnings growth to remain challenged by a more competitive environment, while lessons from past M&A integrations show this is usually a turbulent transition period,”
wrote XP analyst Danniela Eiger.
Nassar believes the company has been preparing for the coming months despite the pressure and signals that those unwilling to move in the same direction may leave.
“That’s human nature,” he said when asked about the formation of internal factions after mergers. “But there has to be an understanding to break down these biases, to integrate and embrace [the merger]. Our mindset is to treat everyone with care, because we will have to deal with people.”
The CEO admits he is “positively contaminated” by the atmosphere, but said the sector has also been influenced by what he has seen in other retail mergers.
“We’ll stumble, make mistakes, correct them, get back up, and move on. These were two competing companies that fought for customers on the battlefield. We’ll have to lay down our arms, and we will.”
Nassar said that, on January 5, there will be what he described as “going to war.” The first integration event will take place at Cobasi’s headquarters, bringing together Zimerman, Cobasi partners João, Paulo, and Ricardo Nassar, as well as executives and managers from both companies, to begin discussions on the new phase.
Office and board
Initially, the companies’ offices will remain separate, but teams are expected to move into Cobasi’s headquarters in western São Paulo, where space is already available. This consolidation is expected to contribute to the administrative reductions and cost savings.
According to sources, the board of directors’ lineup is broadly defined, with only minor adjustments pending. There is no voting agreement, as Petz shareholders will hold 52.6% of the new group and Cobasi 47.4%, requiring consensus-building at the board level to ensure alignment.
Sources pointed out that the fact that the deal had to be examined by the antitrust watchdog gave both sides more time to absorb the shock and mature their positions. “Petlove’s appeal had a positive effect, as both sides came even closer together,” one person familiar with the talks noted.
“But they will have to seek consensus, and at least so far, the environment appears calm. They have Cláudio Ely, former RD executive, on the board, who has been through all this before and can guide them. They’re not naïve,”
the source added.
The size of the business
Based on 2025 data, Grupo Petz Cobasi emerges with total gross revenue of R$5.78 billion through September, an 8.8% increase over 2024. Cobasi expanded faster, at 10%, while Petz grew 7.8%; Cobasi is also more profitable.
Petz’s accumulated gross margin in 2025 stands at 39.2%, up 0.3 percentage points, while Cobasi’s reached 45.2%, an increase of 2.7 points. Petz’s EBITDA margin in 2025 is 7.1%, compared with 10.1% at Cobasi. Petz has a more developed digital operation, which naturally affects profitability, but this is expected to accelerate both companies’ multichannel strategy once they merge.
At the 2025 pace, Cobasi has been able to expand while expenses grow at half the rate of revenue, whereas at Petz, both lines advance at nearly the same pace. Still, Petz has a lower expense-to-revenue ratio (32% versus 35%) as it sells more — a R$500 million difference over the year—with nearly the same store number: 264 at Petz and 254 at Cobasi.
These figures help explain the transformation Nassar refers to, extracting the best from both companies over up to three years, the projected integration timeline. The process also involves behavioral measures — little detailed when the merger was approved — which must comply with CADE’s determinations.
One requirement is that the company must not open new stores near the 26 units to be divested for a period of 24 months, and must refrain for 12 months from approaching customers in those areas. It is also barred from bidding on competitors’ brand names in online search auctions, limiting its digital firepower.
Among decisions already made, the company will retain four distribution centers — one from Cobasi and three from Petz (a decision that could be revisited with the advance of tax reform). The management software will be Totvs Protheus, currently used by Petz, while Cobasi uses Totvs RMS. Historically, system unification tends to create friction, as it affects the day-to-day administrative routine.
Plans
The companies are expected to ease back on store openings in 2026, given the challenges of the early integration phase. Cobasi opened ten stores in 2025 and is expected to maintain that pace next year.
Petz opened four stores in 2025, and Zimerman had told analysts in November that it was time to accelerate expansion in services rather than physical stores.
“I think the services area will be completely restructured,”
Nassar noted. He pointed out that Cobasi is more developed in franchising through Petanjo, with 150 units as a franchisor of pet grooming salons and veterinary clinics, and the idea is to replicate this model, as Petz’s franchise plan has advanced less and remains at a pilot stage.
The forecast is for another 30 Petanjo franchises in 2026. Petz, meanwhile, is strong in hospitals — it operates 14 24-hour inpatient units under the Seres brand — and this segment could gain further traction.
Under the transaction agreement, Cobasi Investimentos will incorporate Petz through the issuance to Petz shareholders of one share of the new company plus an estimated R$0.71 per share, adjusted by the CDI (the interbank deposit rate, used as an investment benchmark in Brazil). Petz shareholders will migrate to Cobasi’s shareholder base and will hold 52.6% of the share capital, while Cobasi partners will retain 47.4%.
This marks a turning point after the shock caused when the merger was sent for CADE review. The deal had been approved without restrictions by the regulator’s general superintendence midyear, until Petlove entered the fray by filing an appeal in June, complicating the situation.
Armed with a heavy legal strategy, Petlove alleged risks to competition, including increased market concentration leading to higher prices and harm to medium and small players. It suggested the sale of 105 of the company’s 267 stores in São Paulo and also one of the brands. On December 10, the antitrust watchdog ultimately ordered the sale of 26 units. There are three interested parties: Petlove, Petcamp, and a third chain, which Nassar declined to name.
Source: Valor International
