Norwegian buys Prestige for US$3 billion

Norwegian Cruise Line Holdings, the world’s third largest cruise company, has just become even bigger and better after purchasing upscale brand, Prestige Cruise International, parent company of luxe-line Regent Seven Seas Cruises and “upper premium” Oceania Cruises.

Norwegian Cruise Line Holdings, the world’s third largest cruise company, has just become even bigger and better after purchasing upscale brand, Prestige Cruise International, parent company of luxe-line Regent Seven Seas Cruises and “upper premium” Oceania Cruises.

The US$3 billion deal, announced last night, will give Norwegian Cruise Line an opportunity to tap into the luxury-end of the cruising market, and its higher fares, which is expected to boost its bottom line.

It also allows the cruise line to increase revenue from outside of the Caribbean, where it currently gets approximately half of its sales, but in recent years, has also had to fight an influx of competition. The deal, which is set to close at the end of the year, will see an additional eight ships added to Norwegian’s existing fleet of 13.

Norwegian CEO, Kevin Sheehan, who will keep his seat at the top, said his immediate goal would be to provide better financial returns for the company.

“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 Mr Sheehan said.

“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.”

“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,” Frank Del Rio, chairman and CEO of Prestige said.

Following the deal, Del Rio will remain chief of Prestige, which is 80% owned by private-equity firm Apollo Global Management.

Snapshot of big players on the high seas:

Carnival Corp: 101 ships; 10 brands; 212,000 berths; US$15.5 billion revenue in fiscal 2013

Royal Caribbean Cruises: 42 ships, six brands, about 100,000 berths; US$8 billion revenue in 2013

Norwegian Cruise Line Holdings (combined with Prestige): 21 ships, three brands, 40,952 berths; US$3.8 billion annual revenue in 2013.