Brazil’s competition authority, CADE (Administrative Council for Economic Defense), is poised to give unconditional approval to the anticipated merger between leading pet retailers Petz and Cobasi, according to a report by Brazil Journal.
The clearance by CADE’s Superintendence-General (SG) is expected later this week, paving the way for the formation of a new national leader in Brazil’s pet retail market.
The merger, announced in April 2024 and formalized through a cash-and-share swap deal, will unite the country’s two largest pet store chains into a company with 483 physical locations and combined 2023 revenues of R$6.9 billion ($1.32 billion). The transaction, if finalized, would create a dominant player in South America’s largest pet care market.
Key Findings by CADE
According to sources cited by Brazil Journal, the SG concluded that the combined market share of Petz and Cobasi is low enough to avoid any structural or behavioral remedies. CADE reportedly excluded online and supermarket pet product sales from its relevant market definition and instead relied on a geographic proximity model—using travel time metrics of 10–15 minutes—to assess local market concentration.
The SG’s analysis found that even with the merger, the national average concentration would only reach 28%, well below CADE’s typical threshold for concern at around 40%, and far from any levels that would trigger default intervention.
While some local markets—particularly in São Paulo—exhibited higher levels of overlap, CADE determined that robust competition from other strong players mitigates any antitrust risk.
Challenges Ahead
Despite the expected unconditional approval, the process is not yet fully concluded. Brazilian pet e-commerce giant Petlove has entered the case as an interested third party and is expected to file an appeal within the 15-day regulatory window, potentially escalating the case to CADE’s Administrative Tribunal. The company contests the SG’s market definition, arguing that competition should be measured among large-format specialty stores only—excluding neighborhood shops that still account for a majority of pet retail sales in Brazil.
If the appeal proceeds, the final decision will rest with CADE’s Tribunal, although insiders suggest the outcome is unlikely to change. “It’s a very simple case, and there is little room for doubt,” one source reportedly said.
Strategic Implications
The merger brings together two complementary retail models. Petz has built a robust digital and omnichannel infrastructure, while Cobasi has a long-established reputation for in-store service and customer loyalty. The companies believe the combination will enhance operational synergies, reduce costs, and improve pricing for consumers.
Paulo Nassar, CEO of Cobasi, will lead the merged entity, while Sergio Zimerman, CEO and founder of Petz, will serve as Chairman. Under the new ownership structure, Zimerman will retain 24.5% of the merged company, down from his current 47% stake in Petz.
Zimerman emphasized the strategic rationale: “We are two very complementary companies, and this union will make us even stronger. Our goal is to reduce costs and pass those savings on to the consumer.”
Market Outlook
Brazil’s pet retail market is highly fragmented and continues to experience competitive pressures from cross-border platforms, especially in the accessories segment. Traditional retailers are also grappling with broader economic challenges and declining consumer demand following the post-pandemic boom.
Nonetheless, Petz and Cobasi believe that consolidation offers a pathway to stronger, more rational growth. The merger could allow them to avoid store cannibalization, optimize expansion plans, and negotiate better terms with suppliers.
What’s Next?
The operational integration of Petz and Cobasi is expected to be completed by mid-2025, pending final antitrust clearance. If no appeals are filed or if an appeal is denied, CADE’s unconditional approval would be formalized, allowing the companies to move forward with integration.
However, if CADE’s Tribunal reviews the case, a decision could be delayed by several months. In a recent report, financial consultancy XP estimated that CADE may request the closure or divestment of up to 11 stores, primarily in São Paulo, though this now seems unlikely given the SG’s favorable recommendation.
