Mass-market cruise giant Royal Caribbean and luxury line Silversea Cruises soon will be on the same team.
The parent company of Royal Caribbean on Thursday announced it had struck a deal with Silversea chairman and owner Manfredi Lefebvre D’Ovidio to acquire a two-thirds stake in the company Lefebvre's family has run for more than 20 years.
In what amounts to the biggest cruise deal in several years, Royal Caribbean Cruises said it would pay approximately $1 billion for the stake. Lefebvre also will receive approximately 472,000 shares of Royal Caribbean contingent upon achievement of certain performance metrics over the 2019-2020 period.
The offer values Silversea at around $2 billion.
The deal gives Royal Caribbean an entree into both high-end luxury cruising and expedition-style cruising — a type of cruising that involves small, often rugged ships with landing craft that can be used to visit remote and hard-to-access places. Silversea has been building a significant business in expedition-style cruising over the past decade.
“Silversea is a crown jewel, and the acknowledged leader in luxury and expedition cruising, two key markets that are poised for growth,” Royal Caribbean Cruises Chairman and CEO Richard Fain said in a statement. “Uniting our two companies presents an extraordinary opportunity to expand vacation options for guests and create revenue in strategic growth areas.”
Royal Caribbean Cruises is the parent company of the Royal Caribbean brand as well as Celebrity Cruises and Azamara Club Cruises. The company also is a 50% joint venture owner of the German brand TUI Cruises, a 49% shareholder in the Spanish brand Pullmantur and a 36% shareholder in the Chinese brand SkySea Cruises. None of the brands offer high-end luxury cruises or expedition cruises of the type offered by Silversea.
The deal will give Silversea greater access to capital as well as Royal Caribbean's distribution network.
“This partnership will bolster the growth of this exceptional brand founded by my father," Lefebvre said in a statement. “I have always been kindred spirits with Richard, and we share a vision of offering excellence and leadership to our guests. This new partnership gives Silversea the opportunity to accelerate the growth of the most successful luxury and expedition cruising brand in the world.”
Lefebvre will remain executive chairman after the deal closes, the companies said. Silversea CEO Roberto Martinoli also will stay on.
Wall Street analysts generally were upbeat about the combination, and Royal Caribbean stock rose more than 4 percent Thursday in early trading.
In a research note sent to investors Thursday, Wells Fargo analyst Timothy Conder said the deal could add 25 cents per share to Royal Caribbean's earnings in the first year after it's completed thanks to $50 million in cost savings between the two companies.
Conder noted the deal will round out Royal Caribbean's portfolio of brands and expand its product offerings for higher-end consumers. "The demand for ultra-luxury and expedition cruising continues to expand above other market segments," he said.
Royal Caribbean said it expected the deal to close later this year, subject to customary closing conditions and regulatory approvals.
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