Sports World and Smart Fit are in talks to merge
The gym chains Grupo Sports World and Smart Fit announced the signing of a memorandum of understanding for a possible merger in Mexico, resulting in more than 230 gyms in various areas of the country , as reported in a joint statement on Tuesday.
Smart Fit , based in Brazil, is the largest gym chain in Latin America , with a presence in 13 countries in the region and 900 gyms at the end of 2020. Regarding the Sports World Group, it is a club operating company sports of Mexico.
With the operation, the two companies expect to generate "relevant synergies", with a potential increase in profitability and a broader range of services for their clients.
The possible merger is subject to the signing of a binding agreement between the parties and other conditions and authorizations for this type of transaction, both at the corporate and governmental level.
Benefits of a possible merger
In an analysis, Grupo Actinver listed the benefits that a merger would bring for these companies:
1. Significant generation of synergies and improvements in profitability for both companies , which have been particularly affected by the health emergency caused by COVID-19, which led the authorities to order the temporary closure of several establishments, including gyms.
2. Greater diversification , since Sports World would enter a broader segment of the market thanks to Smart Fit, which focuses on competing with neighborhood gyms.
3. A broader offer of services for all users , including the strengthening of the virtual segment.
4. It would be the merger between the undisputed leaders of full-service clubs (GSW, with 58 clubs) and low-cost (Smart Fit, with 172 clubs) in the country, “ which would result in one of the Top 10 companies of Wellness worldwide ”, states Actinver in the analysis.
5. The brokerage believes that it would bring greater marketability to the Sports World stock, in addition to attracting a broader universe of investors due to the greater scale that the company would have. This would give a potential growth of 130% to the shares of the company.
6. Finally, on the financial side, based on public information from Smart Fit, revenue and operating cash flow are expected to be more than 3 times higher than the current generation of Sports World.
With information from Europa Press.