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Smiles to Take Control of Netpoints in 5 Years, Andrade Says

Oct. 10 (Bloomberg) -- Smiles SA, the frequent-flier unit of Gol Linhas Aereas Inteligentes SA, plans to take control of Netpoints Fidelidade SA in five years to expand its business with retailers, Chief Executive Officer Leonel Andrade said.

Smiles announced this week that it agreed to acquire a 25 percent stake in the retail consumer loyalty program for 25 million reais ($11.4 million). The deal includes an option for Smiles to increase its stake to 50 percent plus one share within five years.

“That’s our intention, and we’ll invest so Netpoints gets stronger for us to take control of it,” Andrade said in a telephone interview from Sao Paulo yesterday. “Smiles will be the leader in partnerships with retailers.”

Spun off from Gol in April, Sao Paulo-based Smiles operates loyalty programs for about 150 retailers in addition to its business with the airline. Multiplus SA, operator of the frequent-flier program for the Brazilian unit of Latam Airlines Group SA, has about 300 retail partners.

Smiles’s shares rose 1.3 percent to 27.75 reais at the close of trading in Sao Paulo, the highest level since Sept. 30.

Netpoints has relationships with about 100 companies, mainly supermarkets and online retailers, according to a regulatory filing Oct. 8. The company plans to use proceeds from the stake sale to expand to more cities in Brazil and find new partners, Andrade said.

“The company is not complacent,” Sandro Fernandes, an analyst at brokerage firm Geraldo Correa in Belo Horizonte, Brazil, said in a telephone interview. “It’s actually looking for ways to grow and add value to shareholders. Investors loved to hear that.”

To contact the reporter on this story: Denyse Godoy in Sao Paulo at dgodoy2@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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