Prestige Cruises to be purchased by Norwegian Cruise Line
Norwegian Cruise Line Holdings Ltd said that it will purchase Prestige Cruises International Inc from Apollo Global Management LLC in a deal worth $3 billion. This move will expand Norwegian Cruise Line Holdings high-end luxury cruise offerings.
The world's third-largest cruise operator, Norwegian Cruise’s shares in early trading were up 13 percent at $37.57.
Prestige Cruises which registered with U.S. regulators for an IPO in January, owns Oceania Cruises, an upper-premium cruise operator and Regent Seven Seas Cruises, the luxury cruise operator. Prestige operates eight ships with around 6,500 berths.
Norwegian Cruise which is based in Miami operates 13 cruise ships in routes spanning the Caribbean, North America, Central America, the Baltic and Mediterranean. Norwegian Cruise which operates cruise liners such as Norwegian Spirit and Norwegian Sky, in 2013, had revenue of $2.57 billion, up from 2012 by 13 percent.
In the coming years, the cruise industry, which is worth $29 billion, is expected to benefit from the rise of the middle class in emerging economies such as India and China. Many companies are vying to position themselves as the cruise operators of choice for these new customers.
According to a regulatory filing, as of 30th June, Apollo Global Management had a 20 percent stake in Norwegian Cruise. In 2007, Apollo Global created Prestige to hold its luxury cruise investments.
Norwegian Cruise said it would finance the deal with debt, existing cash and through a stock offering of around 20.3 million shares.
For the deal, J.P. Morgan Securities LLC, Deutsche Bank and Barclays are providing committed financing to Norwegian Cruise.
Norwegian Cruise added this deal will immediately add to earnings as well as result in $25 million in initial savings. Norwegian Cruise said it would also pay up to $50 million to Prestige shareholders upon achievement of certain 2015 performance metrics. Two of the top shareholders of Norwegian Cruise, TPG Capital and Genting Hong Kong Ltd have agreed to the deal.