NCL Reports It Has Agreed to Purchase PCH

[rallydave]

Market Pulse Norwegian Cruise to buy Prestige Cruises in deal valued at $3.03 billion

 

 

 

 

Published: Sept 2, 2014 8:11 a.m. ET

 

 

 

 

 

By

TomiKilgore

 

Reporter

 

 

 

 

NEW YORK (MarketWatch) -- Norwegian Cruise Line Holdings NCLH, +0.36% said it has agreed to buy upscale cruise provider Prestige Cruises International in a cash and stock deal valued at $3.03 billion, including debt. Prestige is the parent company of Oceania Cruises, which operates five ships, and Regent Seven Seas, which operates three ships. "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's chief executive. Norwegian's shares were still inactive in premarket trade Tuesday. Through Friday, the shares have lost 6.1% year to date, while the S&P 500 has gained 8.4%.

[JVNYC]

More detail from CNN Money:

 

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

September 02, 2014: 07:57 AM ET

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.

[Caroldoll]

But this move is the way of the world...build a brand and sell when it is financially beneficial.

[computerworks]

Done deal...

 

 

"...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."

 

Here comes the blender. Tread softly, Kevin. :o

[Arusha]

 

"...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."

 

 

 

"

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;

"

 

Uh-oh! I know what this bizspeak means...

[maxamize]

"

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;

"

 

Uh-oh! I know what this bizspeak means...

 

As do i... This means big changes are ahead.

[computerworks]

"

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;

"

 

Uh-oh! I know what this bizspeak means...

 

Yup...typical Press Release bullshirt.

 

I would not expect to see a waterslide on the Riviera anytime soon...

...but I wouldn't keep your current sales rep on speed-dial.

 

Plus, the Shore Excursion department should not nail any family pictures to the wall at their desks. :p

[hypercafe]

FDR and Kevin, good luck with your new family. I meet both of you on the Riviera and the Breakaway. I think this is a great fit and the future will bring great cruising.

 

Tom

 

 

Sent from my XT1032 using Forums mobile app

[Paulchili]

FDR and Kevin, good luck with your new family. I meet both of you on the Riviera and the Breakaway. I think this is a great fit and the future will bring great cruising.

Tom

 

 

Sent from my XT1032 using Forums mobile app

 

If you like NCL - and you obviously do as most of your cruising days are on NCL. It would seem like a perfect fit for you as you have nothing to lose :)

Edited September 2, 2014 by Paulchili

[Travelcat2]

This thread is fading fast. Details of the purchase are on the other thread.

[LHT28]

The new itineraries for 2016 will be released soon ..let's see how much confidence O regulars have that things will stay the same or get better under the NCL umbrella

People will talk with their wallets ;)

 

I saw the writing on the wall with my cruise in January ...service was not great some crew were rude & argumentative with passengers, not their job attitudes

not like the crew members from Europe or Philippines who go above and beyond to make your time onboard special

 

Only time will tell ..I will wait & see

 

YMMV

 

Lyn

[Paulchili]

The new itineraries for 2016 will be released soon ..let's see how much confidence O regulars have that things will stay the same or get better under the NCL umbrella

People will talk with their wallets ;)

 

I saw the writing on the wall with my cruise in January ...service was not great some crew were rude & argumentative with passengers, not their job attitudes

not like the crew members from Europe or Philippines who go above and beyond to make your time onboard special

 

Only time will tell ..I will wait & see

 

YMMV

 

Lyn

 

+1

We are close to our 20th (free) cruise and I wanted to book some cruises in 2016 to get there. Now, I think I'll wait and see how our next 2 Oceania cruises will go before booking any more.

[tanny18]

+1

We are close to our 20th (free) cruise and I wanted to book some cruises in 2016 to get there. Now, I think I'll wait and see how our next 2 Oceania cruises will go before booking any more.

Paul, we are in the same situation as you and Marsha!! We have 19th coming up in 3 weeks and then the "freebie." Also want to look at 2016. I'll see how this one goes and then decide what to do. Hopefully, everything will stay in place and we will be as happy as we have ever been :rolleyes: Arlene

[computerworks]

The new itineraries for 2016 will be released soon ..let's see how much confidence O regulars have that things will stay the same or get better under the NCL umbrella

People will talk with their wallets ;)

 

I don't think it will make one bit of difference to the cruise experience. I am anxiously awaiting the new calendar and will have no problem booking out into that date range.

 

My opinion is that the significant changes thru 2015 will be in the back office... technology, systems and economies of scale benefits for purchases and contracts, etc. They can enhance profits without changing a thing topside.

Edited September 2, 2014 by computerworks

[PaulMCO]

+1

We are close to our 20th (free) cruise and I wanted to book some cruises in 2016 to get there. Now, I think I'll wait and see how our next 2 Oceania cruises will go before booking any more.

 

+2

 

Really pissed at O with my Amazon cruise and the recent price reduction which was not passed on to those fully paid.

 

Already have a Silversea and Crystal cruise as my next two... (sampling the waters beyond O)

 

 

I saw the writing on the wall with my cruise in January ...service was not great some crew were rude & argumentative with passengers, not their job attitudes

Lyn

 

Lyn was this on an "O" or "R" class ship??

Edited September 2, 2014 by PaulMCO

[Hunding]

A B2B on RSSC this Nov/Dec, and an Alaska (summer) and "Grand Voyage" (fall) on Oceania next year. Fervently hoping the need doesn't arise to alter our 2015 plans….

[Travelcat2]

If someone had a cruise in January where the crew were not their normal happy selves, it would obviously have nothing whatsoever to do with what is happening now. We sailed on Regent in December/January -- had our first negative experience (again - nothing to do with NCL), and returned in June to have one of the best onboard experiences we have ever had.

 

PaulMCO had some comments on the other thread. I'd like to briefly address them:

 

 

"common reservation system. (look what happens when HAL takes over Seabourn) "

 

common HQ in Miami for all three lines (same like Carnival -- come HQ for HAL/Seabourn in Seattle)

 

common shore excursion department

 

common purchasing system and utilizing same suppliers allows significant cost savings in food, household supplies, BEDDING etc. use of a common contracting firm for employees "

 

I'm not certain why anyone would fear these items because Oceania and Regent merged almost everything you described already. And, although HAL has not taken over Seabourn -- they merged offices. It was a mess for a while but seems fine now. They did not have to merge offices with Carnival nor would PCH merge offices with NCL (IMO based on the past 10 years of buy-outs and mergers within the cruise industry).

Edited September 2, 2014 by Travelcat2

[LHT28]

+2

 

Really pissed at O with my Amazon cruise and the recent price reduction which was not passed on to those fully paid.

 

Already have a Silversea and Crystal cruise as my next two... (sampling the waters beyond O)

 

 

 

Lyn was this on an "O" or "R" class ship??

 

Riviera ...

[Tarpeian Rock]

"

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;

"

 

Uh-oh! I know what this bizspeak means...

 

 

 

Oh so sadly true. Surely we have all seen the exact, same, precise words used for the announcement of multiple airline mergers. And what has THAT gotten us? 18-inch wide seats and upcharges for everything except toilets (and isn't RyanAir threatening that?)

 

I think our April O cruise will be OK, but business history of the past 20 years has given us all ample cause for skepticism and worry in the mid- to long-term. What set business mergers - from airlines to banks to telecom to cable - haven't used the exact same PR release, the same happyspeak rationales, the same blithe promises, the same "executive continuity" pledges.

 

Honestly, don't the people who write these things know we've heard it all before?

[Wendy The Wanderer]

But this move is the way of the world...build a brand and sell when it is financially beneficial.

 

Not sure why this cuts your options. And yes, it's the way of the world, and what Apollo clearly intended to do, no surprise here.

[CintiPam]

I simply will wait and see.

[PaulMCO]

Riviera ...

 

We heard similar stories from the staff that many are not happy. They earn less on the "o" ships. On R ships their contracts call for more hours worked but higher pay.

 

 

If someone had a cruise in January where the crew were not their normal happy selves, it would obviously have nothing whatsoever to do with what is happening now. We sailed on Regent in December/January -- had our first negative experience (again - nothing to do with NCL), and returned in June to have one of the best onboard experiences we have ever had.

 

PaulMCO had some comments on the other thread. I'd like to briefly address them:

 

 

"common reservation system. (look what happens when HAL takes over Seabourn) "

 

common HQ in Miami for all three lines (same like Carnival -- come HQ for HAL/Seabourn in Seattle)

 

common shore excursion department

 

common purchasing system and utilizing same suppliers allows significant cost savings in food, household supplies, BEDDING etc. use of a common contracting firm for employees "

 

I'm not certain why anyone would fear these items because Oceania and Regent merged almost everything you described already. And, although HAL has not taken over Seabourn -- they merged offices. It was a mess for a while but seems fine now. They did not have to merge offices with Carnival nor would PCH merge offices with NCL (IMO based on the past 10 years of buy-outs and mergers within the cruise industry).

 

 

Depends on how they manage it. Which meat supplier does the most business -- NCL or "O". Let me guess NCL... You think the NCL supplier is better?

 

Just from my business experience -- mergers of the unequals -- the unequal always loses.

Edited September 2, 2014 by PaulMCO

[Hambagahle]

the only thing in this report that bothers me is that FDR has agreed to remain in control until the end of 2015. He is, as far as I can determine, what makes Oceania what it is... I am glad our cruise is in 2015 and after that I shall have a wait and see attitude... I am not at all sure that as such the acquisition is such a bad thing. But loosing FDR would be!

[Paulchili]

the only thing in this report that bothers me is that FDR has agreed to remain in control until the end of 2015. He is, as far as I can determine, what makes Oceania what it is... I am glad our cruise is in 2015 and after that I shall have a wait and see attitude... I am not at all sure that as such the acquisition is such a bad thing. But loosing FDR would be!

 

My concern is that FDR can only do what he is allowed to do, no matter how long he stays.

If he continues to have a free hand, things should be OK. However, if he is told by NCL what and how to do things - that's a different matter.

As others have said - let's wait and see (but I am not holding my breath based on the experiences from other mergers in the last couple of decades in all walks of life - I agree with PaulMCO).

Edited September 2, 2014 by Paulchili

[G&G]

We exclusively sailed on Holland America and then Carnival bought HAL. Since the buyout HAL's service and quality of food has continued to decline.

 

That is why we switched to Regent & Oceania. Now where will we go ?

 

Signed,

 

Very disappointed :mad: