Gol’s takeover of Smiles fails after disagreement about valuations

For the second time, the airline Gol tried to take over its mileage subsidiary Smiles, in which it owns a 52.6% stake, but the deal failed because the parties did not reach an agreement on the valuations of the businesses. Gol’s Executive VP and CFO, Richard Lark, said to the Valor Econômico newspaper that the holding still intends to take over the subsidiary.

Smiles’ net income totaled only $1 billion reais in 2018 compared to a Gol’s net income of $11.4 billion. However, the mileage subsidiary has higher margins and is less affected by the foreign exchange volatility and oil prices than the airline, in addition to having a lower debt.

Smiles disclosed a material fact informing that the Independent Committee, created to evaluate the takeover proposal in compliance with the Opinion 35 of the Brazilian Securities and Exchange Commission, did not reach an agreement with the holding about the exchange of shares. According to Mauro Rodrigues da Cunha, Amec’s CEO, the result indicates the committee conducted an unbiased analysis.