NCL agrees to buy Prestige (Oceana, Regent) for $3B

[johnnypiano]

http://investor.ncl.com/releasedetail.cfm?ReleaseID=868467

 

Norwegian Cruise Line Holdings Ltd. Agrees to Acquire Prestige Cruises International, Inc. for $3.025 Billion

Acquisition immediately accretive to earnings without synergies; initial $25 million of synergies will result in high single-digit percentage adjusted EPS accretion

 

Combination results in a diversified cruise operator with leading global cruise brands across market segments

 

Transaction enhances already best-in-class financial metrics

 

MIAMI, Sept. 2, 2014 (GLOBE NEWSWIRE) -- Norwegian Cruise Line Holdings Ltd. ("Norwegian Cruise Line" or "Norwegian," (Nasdaq:NCLH)), a leading global cruise operator, today announced it has entered into a definitive agreement to acquire Prestige Cruises International, Inc. ("Prestige"), the market leader in the upscale cruise segment and parent company of Oceania Cruises and Regent Seven Seas Cruises, in cash and stock for a total transaction consideration of $3.025 billion, including the assumption of debt.

 

"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," said Kevin Sheehan, Norwegian Cruise Line's chief executive officer. "Not only does this acquisition immediately enhance our financial performance, but it also deepens the bench of talent that we have been developing over the years. Our complementary strengths and skillsets will pave the way for new cross-selling opportunities, cross-brand collaboration, cross-business support, as well as joint partnerships which, coupled with meaningful synergies that can be quickly implemented, will provide solid accretion to earnings per share and drive long-term shareholder value," added Sheehan.

 

"We are excited to become part of the Norwegian family and start a new chapter for our company," said Frank Del Rio, chairman and CEO of Prestige. "With Oceania and Regent, we have built iconic brands with distinctive product offerings and strong customer loyalty. The combination is very compelling and will allow us to further enhance our renowned guest experience. We are looking forward to joining the Norwegian team and building upon the success that our three brands have already achieved."

 

Prestige operates eight ships and approximately 6,500 berths under two segment-leading brands. Oceania Cruises is the market leader in the upper-premium cruise segment with five ships offering destination-oriented cruise vacations to more than 330 ports around the globe, gourmet culinary experiences, elegant accommodations and personalized service. Regent Seven Seas Cruises is the market leader in the luxury cruise segment and operates three award-winning, all-suite ships, with an additional ship on order for delivery in summer 2016. Regent offers the industry's most inclusive luxury vacation experience visiting over 250 destinations worldwide. Frank Del Rio will remain chief executive officer of Prestige.

 

"The combination of three distinct brands, each serving a different market segment, under one umbrella immediately creates an industry-leading cruise operator with an unmatched growth trajectory and a portfolio of products that allows us to appeal to guests at every stage of their life cycle," added Sheehan. "We are fully committed to retaining the brand propositions, guest experiences and cultures of the Norwegian, Oceania and Regent brands that have allowed each to realize such success."

 

Transaction Rationale

 

The compelling rationale to acquire Prestige includes:

 

The diversification of cruise market segments by adding upper premium and luxury brands;

The further enhancement of industry-leading financial metrics;

Opportunities for synergies and the sharing of best practices among brands;

An increase in economies of scale providing greater operational leverage;

The expansion of growth trajectory and global footprint; and

The opportunity to complement Norwegian's new build program with the existing Regent order that provides measured, orderly capacity growth through 2019.

Transaction Details

 

The total transaction consideration of $3.025 billion includes the assumption of debt. Additionally, a contingent cash consideration of up to $50 million to Prestige shareholders would be payable upon achievement of certain 2015 performance metrics.

 

In early July, Norwegian's Board of Directors formed a Transaction Committee and delegated it full authority to negotiate and approve a transaction. The Committee consisted entirely of disinterested directors. Genting Hong Kong Limited and certain funds affiliated with TPG Capital, each of whose consent was required pursuant to Norwegian's existing shareholders' agreement have consented to the transaction. The Transaction Committee, who retained its own financial and legal advisors, has unanimously approved the transaction. The transaction is subject to regulatory approvals and other customary closing conditions and is expected to close in the fourth quarter of 2014.

 

Norwegian will finance the acquisition with existing cash, new and existing debt facilities and the issuance of approximately 20.3 million shares of its common stock. Pursuant to the requirements of NASDAQ Rule 5635, holders of a majority of Norwegian's common stock have consented to the issuance of such shares.

 

Barclays is acting as lead financial advisor to Norwegian, Deloitte Consulting, LLP is acting as diligence advisor and Weil, Gotshal & Manges LLP is providing legal counsel. UBS Investment Bank is acting as financial advisor to Prestige and Paul, Weiss, Rifkind, Wharton & Garrison LLP is providing legal counsel. Perella Weinberg Partners is acting as financial advisor to the Transaction Committee of the Norwegian Board of Directors and Cravath, Swaine & Moore LLP is providing legal counsel. J.P. Morgan Securities LLC and Deutsche Bank are also serving as financial advisors to Norwegian. Barclays, J.P. Morgan Securities LLC and Deutsche Bank have provided committed financing to Norwegian to support the acquisition.

[SissasMomE]

Yay!! :)

[DirtyDawg]

Interesting financial news tidbit but unless you are a NCL shareholder (or debt holder) it's another "who cares" moment.

[johnnypiano]

Interesting financial news tidbit but unless you are a NCL shareholder (or debt holder) it's another "who cares" moment.

 

I'm sorry you feel that way.

 

While there will be no immediate impact among those who sail NCL, they spoke about potential cost savings and synergies among the brands. There is also potential for bringing some aspects and best practices from Oceania and Regent onto NCL. Specifically on the conference call they spoke about increasing the offerings and quality of the Haven.

 

Also, the overall financial health of the company makes sure that your experience on NCL is always top quality.

[Cole Thornton]

Stock market responding positively early in trading:

 

Norwegian Cruise Line Holdings Ltd. (NCLH)

 

-NasdaqGS

 

$37.28 up $3.97(11.92%)

[TrumpyNor]

Hopefully further down the line this means that existing NCL Latitude members can cruise with Prestige (Oceania Cruises and Regent Seven Seas Cruises) and get the same level of "bonuses" similar to their Latitude level on board the two other cruise lines, like it was possible to do when cruising with Star cruises earlier?

 

I hope so, as I see that they both have cruises in the South Pacific and around Australia and New Zealand, and that is on the top of the list for me when it comes to cruising. But so far I have been patiently awaiting one of NCL's ships to move "down under" within my lifetime, but if I get to keep my Platinum Latitude status when sailing with Oceania Cruises and Regent Seven Seas Cruises, then I would definitely consider it.... :p

Edited September 2, 2014 by TrumpyNor

[smeyer418]

Hopefully further down the line this means that existing NCL Latitude members can cruise with Prestige (Oceania Cruises and Regent Seven Seas Cruises) and get the same level of "bonuses" similar to their Latitude level on board the two other cruise lines, like it was possible to do when cruising with Star cruises earlier?

 

I hope so, as I see that they both have cruises in the South Pacific and around Australia and New Zealand, and that is on the top of the list for me when it comes to cruising. But so far I have been patiently awaiting one of NCL's ships to move "down under" within my lifetime, but if I get to keep my Platinum Latitude status when sailing with Oceania Cruises and Regent Seven Seas Cruises, then I would definitely consider it.... :p

wishful thinking. I don't think they want to grant the lattitude members anything special on the much higher cost cruiselines.

Wasn't Oceania and regent owned by Appollo which owned a majority of NCL Holdings?

 

http://www.prestigecruiseholdings.com/

 

sound like just a quick and easy way to take them public take money out and monetize the value....IMO

Edited September 2, 2014 by smeyer418

[Travelcat2]

wishful thinking. I don't think they want to grant the lattitude members anything special on the much higher cost cruiselines.

Wasn't Oceania and regent owned by Appollo which owned a majority of NCL Holdings?

 

http://www.prestigecruiseholdings.com/

 

sound like just a quick and easy way to take them public take money out and monetize the value....IMO

 

Regent and Oceania do not even grant benefits to each other.

 

Apollo owns PCH (Prestige Cruise Holdings) as well as 20% of NCL. NCL is purchasing PCH but have no idea what happens, if anything, to their 20% of NCL.

Edited September 2, 2014 by Travelcat2

[AAAAmerican]

NCLH :OTC /NASDAQ was so far a high today of $38.05 briefly

now at under 37. Heavy volume is unloading.

 

Stock market responding positively early in trading:

 

Norwegian Cruise Line Holdings Ltd. (NCLH)

 

-NasdaqGS

 

$37.28 up $3.97(11.92%)

[Out to sea!]

Hopefully further down the line this means that existing NCL Latitude members can cruise with Prestige (Oceania Cruises and Regent Seven Seas Cruises) and get the same level of "bonuses" similar to their Latitude level on board the two other cruise lines, like it was possible to do when cruising with Star cruises earlier?

 

I hope so, as I see that they both have cruises in the South Pacific and around Australia and New Zealand, and that is on the top of the list for me when it comes to cruising. But so far I have been patiently awaiting one of NCL's ships to move "down under" within my lifetime, but if I get to keep my Platinum Latitude status when sailing with Oceania Cruises and Regent Seven Seas Cruises, then I would definitely consider it.... :p

 

Not sure if that would happen and it varies by corporation. RCCL allows cross-utilization of benefits earned with Celebrity but Carnival Corporation does not allow cross-utilization of benefits. It will be one of those wait and see things but considering the differences (especially in the cruise prices) in the cruise lines, I would venture to say this will not happen. Could you imagine someone being a Platinum on NCL and walk onto a Regent ship and expect to get Platinum service on a cruise that normally costs 5 times more than an NCL cruise?

[sjbdtz]

Regent and Oceania do not even grant benefits to each other.

 

Apollo owns PCH (Prestige Cruise Holdings) as well as 20% of NCL. NCL is purchasing PCH but have no idea what happens, if anything, to their 20% of NCL.

 

Their 20% of NCL? Goes up in value by 12% in one day! :)

 

 

NCL's CEO Kevin Sheehan is in the Press Release saying that cross-marketing is on their agenda. I take that to mean some cross-over benefits - esp. at the Haven level passengers. I suspect they'll start to solicit some of the existing Haven guests toward O & R, and 'maybe' bring down the entry-point pricing to the Haven, so that aspirational guests can move to the next rung in the ladder.

 

 

Stephen

 

 

.

[sparks1093]

I may be an atypical cruiser but I see each cruise line as a separate entity and don't really care who the parent company happens to be. I think it's smart of NCL to expand its holdings and its markets but if I were to sail on Regent or Oceania it would be in spite of the fact that NCL owns them and not because of it.

[LrgPizza]

I may be an atypical cruiser but I see each cruise line as a separate entity and don't really care who the parent company happens to be. I think it's smart of NCL to expand its holdings and its markets but if I were to sail on Regent or Oceania it would be in spite of the fact that NCL owns them and not because of it.

 

I guess that's my take. I will not be any more or less likely to sail Oceania or Regent.

[david_sobe]

I just hope Mr. Sheehan does not take their embarkation champagne away :eek:

[Cruzaholic41]

I may be an atypical cruiser but I see each cruise line as a separate entity and don't really care who the parent company happens to be.

 

I don't really care who owns what, but I did notice a sharp decline in both Princess and Holland America when they were purchased by Carnival Corp. I'm not big into Oceania or Regent, but I hope they don't lose their prestige due to NCL influence.

Edited September 2, 2014 by Cruzaholic41

[Travelcat2]

Their 20% of NCL? Goes up in value by 12% in one day! :)

 

 

NCL's CEO Kevin Sheehan is in the Press Release saying that cross-marketing is on their agenda. I take that to mean some cross-over benefits - esp. at the Haven level passengers. I suspect they'll start to solicit some of the existing Haven guests toward O & R, and 'maybe' bring down the entry-point pricing to the Haven, so that aspirational guests can move to the next rung in the ladder.

 

 

Stephen

 

 

.

 

Trying to put things into perspective pricewise. I looked up Haven suites and see that the sizes vary so I took the smallest (around 320 sq. ft. if I recall correctly. A 7 night cruise in the smallest Suite is $5,000 for a week (for 2 people).

 

On Oceania, on their smaller ships (new ships are more money), the least expensive 7 night cruise in an inside stateroom (160 sq.) feet is $3,200. In an ocean view stateroom (165 sq. ft.) the cost for the same cruise is $3,600. To get to the smallest Haven size suite equivalent you would book a penthouse suite. The cost is $7,200. The penthouse suites come with a butler. As explained earlier, it includes economy air. Transfers are extra.

 

On Regent's smallest ship (the only one that is not all-balcony), the least expensive cruise I could find was a 7 night Miami to Miami cruise. Their non-balcony suites are 301 sq. feet - a bit smaller than Haven suites. The 7 night cruise in this suite would be $6,600. The same suite with an added balcony (total sq. ft. is 356) would be $8,000.

 

For this level of suite, Regent includes, Roundtrip Air, FREE Unlimited Shore Excursions, FREE Specialty Restaurants, FREE Unlimited Beverages Including Fine Wines and Premium Spirits, FREE Open Bars and Lounges PLUS In-Suite Mini-Bar Replenished Daily, FREE Pre-Paid Gratuities. There are additional benefits in higher level suites.

 

While I highly doubt that there will be shared benefits, I could see some marketing aimed towards Haven suite guests trying out Oceania or Regent. However, it would take a lot to get a Regent passengers onto an NCL ship. The benefits we have accumulated are just too great and most of us prefer cruising on cruise lines where everyone is treated the same.

 

Anyway, hope this information is helpful to anyone considering Oceania or Regent.

Edited September 2, 2014 by Travelcat2

[njhorseman]

Their 20% of NCL? Goes up in value by 12% in one day! :)

 

 

NCL's CEO Kevin Sheehan is in the Press Release saying that cross-marketing is on their agenda. I take that to mean some cross-over benefits - esp. at the Haven level passengers. I suspect they'll start to solicit some of the existing Haven guests toward O & R, and 'maybe' bring down the entry-point pricing to the Haven, so that aspirational guests can move to the next rung in the ladder.

 

 

Stephen

 

 

.

 

I've been receiving unsolicited offers from Oceania and Regent for several years. I assumed it was because they somehow knew we were regular suite passengers on NCL .

[njhorseman]

 

sound like just a quick and easy way to take them public take money out and monetize the value....IMO

 

I agree. Both NCLH and PCH were controlled by Apollo. ( even though Apollo now owns only 20% of NCL, it still controls NCL's board of directors by reason of the original agreement it struck with Genting when it bought a 50% interest in NCL).

 

This was an easy way for Apollo to take advantage of the success of the earlier NCL public offering.

Edited September 2, 2014 by njhorseman

[Wendy The Wanderer]

Hopefully further down the line this means that existing NCL Latitude members can cruise with Prestige (Oceania Cruises and Regent Seven Seas Cruises) and get the same level of "bonuses" similar to their Latitude level on board the two other cruise lines, like it was possible to do when cruising with Star cruises earlier?

...

 

I too doubt very much that this would happen, but as they say, you never know.

 

I think I'm looking forward to seeing if some of the "luxury" practices of O and R rub off on NCL--never sailed them, but I've thought about it. And also hope they re-jig Regent somewhat--their prices are just too high for me any more.

[LHT28]

I've been receiving unsolicited offers from Oceania and Regent for several years. I assumed it was because they somehow knew we were regular suite passengers on NCL .

 

Unlikely

How would they know :confused:

[LHT28]

I just hope Mr. Sheehan does not take their embarkation champagne away :eek:

 

Oceania guests do not get free embarkation drinks

& Regent is all inclusive so it does not matter

 

Maybe NCL will get better pricing for the shore excursion though ;)

Edited September 2, 2014 by LHT28

[buggins0402]

Trying to put things into perspective pricewise. I looked up Haven suites and see that the sizes vary so I took the smallest (around 320 sq. ft. if I recall correctly. A 7 night cruise in the smallest Suite is $5,000 for a week (for 2 people).

 

On Oceania, on their smaller ships (new ships are more money), the least expensive 7 night cruise in an inside stateroom (160 sq.) feet is $3,200. In an ocean view stateroom (165 sq. ft.) the cost for the same cruise is $3,600. To get to the smallest Haven size suite equivalent you would book a penthouse suite. The cost is $7,200. The penthouse suites come with a butler. As explained earlier, it includes economy air. Transfers are extra.

 

On Regent's smallest ship (the only one that is not all-balcony), the least expensive cruise I could find was a 7 night Miami to Miami cruise. Their non-balcony suites are 301 sq. feet - a bit smaller than Haven suites. The 7 night cruise in this suite would be $6,600. The same suite with an added balcony (total sq. ft. is 356) would be $8,000.

 

For this level of suite, Regent includes, Roundtrip Air, FREE Unlimited Shore Excursions, FREE Specialty Restaurants, FREE Unlimited Beverages Including Fine Wines and Premium Spirits, FREE Open Bars and Lounges PLUS In-Suite Mini-Bar Replenished Daily, FREE Pre-Paid Gratuities. There are additional benefits in higher level suites.

 

While I highly doubt that there will be shared benefits, I could see some marketing aimed towards Haven suite guests trying out Oceania or Regent. However, it would take a lot to get a Regent passengers onto an NCL ship. The benefits we have accumulated are just too great and most of us prefer cruising on cruise lines where everyone is treated the same.

 

Anyway, hope this information is helpful to anyone considering Oceania or Regent.

 

You might want to check your O prices... We just received a brochure today showing no air prices on two 7 days in PH3 $3172 and $3428 (small ship). And we're booked on a 10 day R class, gratuities, internet, $200 OBC inside, with air comp for $1699. Still pricey for an inside vs. NCL prices, but the itinerary was the one we favored. We have no issues with the NCL product - they are one of the cruise lines we consider, but we just preferred an inside on O with the itinerary we liked vs. doing a balcony or suite on NCL on a itinerary that we weren't excited about.

 

For those that are itinerary driven, the new cruise lines under the NCL umbrella will have some interest.

[njhorseman]

Unlikely

How would they know :confused:

 

How would they know?

 

NCLH is controlled Apollo. PCH is controlled by Apollo. You don't think there's a chance Apollo exchanges information with Apollo? I'd be willing to bet the NCL privacy agreement (which you automatically accept unless you know where and how to opt out) permits the exchange of marketing information.

 

PS : Here it is, from the privacy policy on NCL's website: http://www.ncl.com/about/privacy-policy

 

"Do we share the information we collect with third parties?

We share Personal Data with our business partners to provide our services, for market and industry research purposes, for advertising and marketing purposes, and for other reasons. If you prefer, you can choose that your information not be shared with our business partners or used for marketing purposes by contacting us at the address listed below."

 

It doesn't require a marketing genius to figure out that NCL's highest ticket customers may be good candidates for moving up to a higher-end cruise line.

Edited September 2, 2014 by njhorseman

[LHT28]

How would they know?

 

NCLH is controlled Apollo. PCH is controlled by Apollo. You don't think there's a chance Apollo exchanges information with Apollo? I'd be willing to bet the NCL privacy agreement (which you automatically accept unless you know where and how to opt out) permits the exchange of marketing information.

 

A possibility

But would it not work both ways ..wouldn't Oceania customers get NCL flyers if that is the case ?

 

MOOT POINT Now ..we will all be getting more flyers ;)

Edited September 2, 2014 by LHT28

[njhorseman]

A possibility

But would it not work both ways ..wouldn't Oceania customers get NCL flyers if that is the case ?

 

MOOT POINT Now ..we will all be getting more flyers ;)

 

NO...you don't want to down sell your customers, you want to up sell them, so you don't want to market NCL to Oceania customers.