Gol buyout plan wipes 39% off Smiles market cap, prompts Brazil inquiry

Brazilian airline Gol Linhas Aéreas Inteligentes Monday announced a plan to buy out minority shareholders in its loyalty program Smiles Fidelidade for an undisclosed price, battering the unit’s shares and prompting regulatory scrutiny. Gol said the plan was aimed at cutting costs, improving corporate governance, and removing the pressure of unrealistic analyst forecasts from the loyalty program, in which Brazil’s biggest domestic carrier still holds a 53% stake. But the lack of a buyout price in the announcement, and concerns that Gol could force the deal through over resistance from minority investors, sent Smiles shares diving 39%. That wiped out nearly 2.5b reais ($669m) of market capitalization in the session. “While this might sound like bad news, the reality is we are coming to the table to negotiate a fair deal for everyone,” Gol’s CFO Richard Lark said. Brazilian securities regulator CVM opened a formal analysis of the proposal, the agency said after markets closed on Monday. Gol said it had asked Smiles to set up “an independent special committee” with which it would negotiate the terms of the transaction to then be submitted “where applicable” to shareholders of Gol and Smiles.<br/>The airline also announced that its operational contracts with the loyalty program will not be renewed in 2032.<br/>