Sectors Shares
SECTIONS

Royal Caribbean adds ultra-luxury cruises with $1 bln stake in Silversea

(Adds executive comments, details updates share price)

By Aishwarya Venugopal

June 14 (Reuters) - Royal Caribbean Cruises Ltd said on Thursday it would buy a 66.7 percent stake in privately owned Silversea Cruises for about $1 billion to add ultra-luxury and expedition cruises to its fleet.

Silversea Cruises, which has nine ships, sails to destinations including Antarctica, the Arctic and Greenland, with most of its tickets selling for more than $5,000.

In contrast, the most expensive cruises run by Royal Caribbean under its Azamara Club Cruises brand cost around $3,000.

"Ultraluxury and expedition cruises are gaps in our portfolio today," Royal Caribbean Chief Executive Officer Richard Fain said on a conference call.

The two segments are the fastest growing areas in the industry that the company could not develop on its own, Fain added in an interview with Reuters.

Shares of the U.S. cruise operator rose as much as 7 percent to $115.50, with the company also maintaining its full-year profit forecast despite higher fuel prices and a stronger dollar.

Including debt, the deal is valued at $2 billion. Royal Caribbean said it plans to finance the purchase through debt.

The 2018 total worldwide ocean cruise industry is estimated to reach $45.6 billion in revenue, a 4.6 percent increase over 2017, according to the industry analytics firm Cruise Market Watch. Royal Caribbean had nearly $9 billion in revenue at the end of 2017.

Silversea Chairman Manfredi Lefebvre d'Ovidio will get about 472,000 Royal Caribbean shares, payable after the Miami-based company achieves some 2019-2020 performance targets.

This translates to about $51 million, based on Royal Caribbean's closing price on Wednesday.

"Silversea had a fantastic plan of growing on its own, but I did realize that the potential that the market was offering Silversea was beyond the means that I could put in place," Lefebvre d'Ovidio told Reuters.

Royal Caribbean does not expect the transaction, which will likely close later in the year, to materially impact its near-term adjusted earnings per share, the company said.

Silversea CEO Roberto Martinoli will continue in his role.

Perella Weinberg Partners LP was financial adviser to Royal Caribbean and Skadden, Arps, Slate, Meagher & Flom LLP provided legal counsel.

Barclays Plc was d'Ovidio's financial adviser and Morgan, Lewis & Bockius LLP provided legal counsel. (Reporting by Aishwarya Venugopal in Bengaluru Editing by Saumyadeb Chakrabarty and Shounak Dasgupta)

First Published: 2018-06-14 13:10:21
Updated 2018-06-14 17:22:54


© 2018 Thomson Reuters. All rights reserved. Reuters content is the intellectual property of Thomson Reuters or its third party content providers. Any copying, republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon. "Reuters" and the Reuters Logo are trademarks of Thomson Reuters and its affiliated companies.