By Brazil Stock Guide – Petlove has asked Brazil’s antitrust authority to require sweeping divestitures before approving the merger between Petz (PETZ3) and privately held Cobasi, shifting from its earlier call for the deal to be rejected outright. The request was filed in a petition submitted to CADE and reported by Broadcast.
According to the filing, Petlove argues that approval should be conditioned on a “robust structural remedy,” including the sale of 105 to 132 stores, distribution centers, data assets, brand rights and operational teams to create an autonomous rival capable of matching the merged group’s scale.
CADE’s tribunal is expected to rule on the transaction later in 2025, during one of its remaining sessions scheduled for Nov. 26 or Dec. 10. Petlove said behavioral remedies would be insufficient to address market-power concerns, noting that the combined company would consolidate the only two megastore chains with national reach in Brazil’s pet retail sector.
Carlos Ragazzo, a former CADE superintendent now representing Petlove, said the market is shaped by high barriers to entry, entrenched brands and logistics networks. He added that smaller pet shops, supermarkets and marketplaces do not exert meaningful competitive pressure.
“Alternative channels do not impose effective competitive discipline on megastores due to lack of scale, density and technological capability,” Ragazzo said. He argued that selling one of the two major brands is “the only structural solution capable of restoring competition.”
Ragazzo cited precedents such as the Sadia-Perdigão merger, in which CADE ordered the sale of assets worth nearly 3 billion reais, and the Localiza (RENT3)-Unidas deal, which required divestiture of part of the fleet and the Unidas brand.
CADE’s General Superintendence approved the Petz-Cobasi deal without conditions earlier this year, concluding that the market is broad and competitive. Petz and Cobasi said at the time that the sector is “highly fragmented” and that remaining players would continue to discipline prices.
Under the merger agreement, Cobasi will incorporate Petz, creating a combined company with expected revenue of about 7 billion reais. Petz shareholders will hold 52.6% of the merged entity, with Cobasi investors owning 47.4%.