Miami, FL, United States (4E) – The third biggest US cruise operator, Norwegian Cruise Line Holdings Ltd has entered into an agreement for its acquisition of Prestige Cruises International Inc. The deal has a price tag of USD3.03 billion, which includes the transfer of ownership of eight luxury vacation liners.
The said sale would be paid out through the exchange of cash, debt and the sale of 20.3 million shares of common stock. Much of the debt was added on to the purchase price, without which the full price would just be at USD900 million.
The common thread between the two cruise firms is private equity firm Apollo Global Management LLC, who owns Prestige and has a 20% interest in Norwegian. This in turn provides Norwegian with two cruise brands namely Oceania Cruises and Regent Seven Seas Cruises. Norwegian competes with Carnival Corp and Royal Caribbean Cruises for the luxury cruise vessel market.
With the purchase, the share prices of Norwegian had jumped by 75% since its public offering back in January 2013.
The deal would allow Norwegian Cruise Line to pay USD50 million to the shareholders of Prestige upon the reaching of financial performance targets by 2015. The deal is expected to be completed by the end of 2014. The deal was also approved by Norwegian Cruise Line’s shareholders, namely TPG Capital and Hong Kong Ltd. The two own 36% of the cruise liner.
In a statement by Norwegian CEO Kevin Sheehan, “The acquisition of Prestige represents an extraordinary opportunity for Norwegian Cruise Line to expand our market presence by adding two established award-winning brands in the upscale cruise segment with loyal followings.”
He added, “(The combination would) pave the way for the new cross-selling opportunities, cross brand collaboration, (and) cross-business support as well as joint partnerships which… will provide solid accretion to earnings per share and drive long-term shareholder value.”
Prestige would also retain the services of Frank Del Rio as its CEO, to oversee the operation of eight ships and 6,500 berthing points, Oceania Cruises and Regent Seven Seas Cruises. Del Rio said, “We are excited to become part of the Norwegian family and start a new chapter for our company.”
This is best exemplified by the latest ships in the fleet, the Norwegian Breakaway and Norwegian Getaway. These two are one of ten largest ships in the world.
The advisory team for Norwegian Cruise Line was comprised of Barclays, JPMorgan Chase and Deutsche Bank. For consultancy, the firm of Weil, Gotshal and Manges as well as the accounting firm Deloitte. Prestige on the other hand was advised by UBS and legal services performed by Paul, Weiss, Rifkind, Wharton and Garrison.
When the news of the acquisition broke of the acquisition, Norwegian Cruise shares jumped by 12% in market trading, easily surpassing the USD37 price per share on the market. This was a shot in the arm considering that in the first eight months of 2014, shares of the cruise liner had dropped by 6%.