Brazil's Soma in talks to acquire Cia Hering for $967 million

SAO PAULO (Reuters) - Brazilian apparel retailer Grupo de Moda Soma is in exclusive talks to acquire Cia Hering for 5.3 billion reais ($967 million) in a cash and share deal, according to securities filings by both companies on Monday.

The acquisition will involve a cash payment to Hering shareholders of 9.630957 reais per share, plus 1.625107 share of Grupo Soma, the filing said, for a total value of 32.54 reais per share.

The deal offers Hering’s shareholders a premium of 43.5% over Friday’s closing share price.

Shares in Hering rose almost 24%, while shares in Soma fell more than 10%. “This acquisition seems to be pricey for Soma and potential synergies are not clear yet,” said Carlos Daltozo, head of equities at research broker Eleven.

Hering earlier this month rejected an unsolicited tie-up offer from competitor Arezzo Industria e Comercio SA, which valued it at 3.3 billion reais.

Hering has agreed to pay a break-up fee of 250 million reais if the talks with Soma break down. Hering, based in the southern state of Santa Catarina, is a major, diversified clothing designer and retailer present mainly in Brazil.

Soma, which owns apparel brands such as Farm, Animale and Maria Filo, said that, if successful, the deal will help it build a bigger retail platform and create unspecified cost synergies.

($1 = 5.4831 reais)

Reporting by Carolina Mandl; additional reporting Ana Mano; Editing by Emelia Sithole-Matarise and Rosalba O’Brien