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Largest gym network in Latin America, Smartfit negotiates merger with Mexican Sports World

Even after a strong digital transformation forced by the COVID-19 pandemic throughout 2020, the Brazilian company wants to expand physically again in 2021

Smart Fit unit in Rio de Janeiro
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  • Combined with 58 Sports World units, Smartfit would have more than 230 gyms in Mexico – the country was the first target of internationalization of the Brazilian company founded in 1996;
  • The deal now depends on the signing of a binding agreement, in addition to other usual conditions and authorizations for this type of operation.

On Wednesday, the largest network of gyms in Latin America, Smartfit published a statement to its shareholders saying that it celebrated, on the April 12th, a “non-binding memorandum of understanding” with Sports World, which operates gyms aimed at family sports in Mexico, for a potential “business combination” between the company and the Smartfit subsidiary in Mexico. The country was the first target of internationalization of the Brazilian company founded in 1996.

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Combined with 58 Sports World units, Smartfit would have more than 230 gyms in Mexico. The deal now depends on the signing of a binding agreement, in addition to other usual conditions and authorizations for this type of operation.

Smartfit ended 2020 with 900 gyms (9% more than in 2019) in 13 countries and 2.6 million customers, 3% less than the previous year. With the coronavirus pandemic and the measures to restrict circulation, a drop in its revenue was expected. In 2020, Smartfit earned BRL 1.2 billion, 36.7% less than the BRL 1.9 billion in revenue obtained in 2019.

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Still, Smartfit carried out a capital increase of BRL 500 million in December and ended 2020 with just over BRL 1 billion in cash balance. Six months earlier, it had acquired the platform Queima Diária, the leader in video-on-demand training in Brazil, with 375,000 clients and a 129% growth between March and December last year. In parallel, Smartfit also launched two digital initiatives of its own, Smart Nutri and Smart Coach, to overcome the difficulties generated by the pandemic and seek new sources of revenue.

Between December 2020 and March 2021, the company concluded two agreements to help it resume its pre-pandemic growth pace. On December 15, 2020, Smart Fit signed an agreement with investors to set up a jointly controlled subsidiary in Brazil, in which investors put BRL 201.9 million to the opening of 34 new gyms. And on March 5, 2021, the company signed a contract to acquire Just Fit, a network of gyms with 27 units located in São Paulo. The acquisition price was not disclosed, and, according to the company, it will not have an immediate impact on Smartfit’s cash balance because it will be calculated and paid “only in a liquidity event at Smart Fit.”

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