Carnival to make a bid for Royal?

[Aoumd]

I'll "never say never," but I doubt that a straight takeover of RCI by Carnival Corp. would be approved by regulators.

 

That said, if we DO play Devils' Advocate and say this rumor is true, regulators can do interesting things. Hypothetically, they could create a situation where Carnival Corp & plc is allowed to acquire RCI, but has to offload Cunard and Princess to Norwegian or something like that. I am NOT advocating that particular outcome (or any particular outcome), and I don't know any more than anyone else here who has read the article, just trying to mention one permutation of how such a merger could work with regulators.

 

That said, I'll believe it when I see more news articles on it. Until then...

[SherriZ366]

Nothing on the Yahoo stock message board which often has wild, unsubstantiated rumors.

[steveru621]

Sounds like a rumor was planted by... Pick your poison.

 

RCI does not appear to be in any great difficulty. The economy has an impact on this industry just like any other. It's trading at 6X earnings, probably below average, but it indicates the market expects earnings to be flat at best. S&P and other analysts have them at HOLD. Hardly a ringing endorsement, but it reflects future prospects of RCI.

 

2.8 Billion market cap for RCI, vs 5.6 Billion for Carnival. They could do it at $35. It's not even a stretch Share Price 15.24 - 39.60, 11/20/08 - 8/11/08.

 

Don't count on the justice department. Cruise ships are in competition with all other forms of travel and vacations. Plus they would probably sell off Celebrity to satisfy justice.

 

Probably more to come.

[Jumbiecruiser]

Sounds like a rumor was planted by... Pick your poison.

 

RCI does not appear to be in any great difficulty. The economy has an impact on this industry just like any other. It's trading at 6X earnings, probably below average, but it indicates the market expects earnings to be flat at best. S&P and other analysts have them at HOLD. Hardly a ringing endorsement, but it reflects future prospects of RCI.

 

2.8 Billion market cap for RCI, vs 5.6 Billion for Carnival. They could do it at $35. It's not even a stretch Share Price 15.24 - 39.60, 11/20/08 - 8/11/08.

 

Don't count on the justice department. Cruise ships are in competition with all other forms of travel and vacations. Plus they would probably sell off Celebrity to satisfy justice.

 

Probably more to come.

 

In order for Carnival to do this, they would have to do some major selling off of brands. Think HAL, Princess and a few more to make this happen. Carnival tried to join with TUI within the last few years but was turned down by the German and Austrian antitrust authorities. TUI is small marbles compared to RCCL.

[RLM77]

A CCL/RCL merger will not happen for reasons that previous responses on this thread have already enumerated. Frankly, I doubt if the Carnival/Princess merger would have been allowed had it been proposed under the current cast of characters in DC. Besides, the rumored $35 price is completely ludicrous at today's stock market levels.

I doubt that CCL will be allowed to make any additional significant cruise line acquisitions for as long as Obama is President, and perhaps well after that. They could hypothetically acquire a related company such as Steiner Leisure if management were so inclined, but no more cruise lines. RCL, on the other had, can hypothetically acquire other cruise lines (NCL, MSC) -- if they can find financing -- or could be acquired themselves. One possible acquiror is Apollo/NCL, though there are others as well.

In the unlikely event that RCL is acquired this year, though, it will be for considerably less than $35.00 per share.

Rich

[Aquahound]

I understand the discussion here and the reasoning why this most likely could not happen, but has anyone questioned the credibility of this news article? Who the heck is that anyway?

[eroller]

If there is any truth to this, my guess is that Carnival feels they can get around regulatory control just like they have with every other acquisition. They promote themselves as a company within the very broad "travel industry" and not the "cruise industry". When you look at the entire travel industry as a whole, Carnival can hardly be considered a monopoly.

 

Hopefully with a new administration in place, they will see beyond the greed of corporate America and realize that such an acquisition would be nothing but detrimental to the industry and consumers. The only people that would really benefit are the high stakes stock holders, and haven't we seen enough of that over the past several years?

 

It amazes me that Carnival's business strategy of just buying up as much of the competition as they can has gotten as far as it has. I was against Carnival or RCCL acquiring Princess/P&O and I'm certainly against this.

 

Ernie

[steveru621]

A CCL/RCL merger will not happen for reasons that previous responses on this thread have already enumerated. Frankly, I doubt if the Carnival/Princess merger would have been allowed had it been proposed under the current cast of characters in DC. Besides, the rumored $35 price is completely ludicrous at today's stock market levels.

 

I doubt that CCL will be allowed to make any additional significant cruise line acquisitions for as long as Obama is President, and perhaps well after that. They could hypothetically acquire a related company such as Steiner Leisure if management were so inclined, but no more cruise lines. RCL, on the other had, can hypothetically acquire other cruise lines (NCL, MSC) -- if they can find financing -- or could be acquired themselves. One possible acquiror is Apollo/NCL, though there are others as well.

 

In the unlikely event that RCL is acquired this year, though, it will be for considerably less than $35.00 per share.

 

Rich

 

It's always fun to speculate. I agree the politicians will make a big show out of any merger, and the EU is even tougher. The odds are a Democrat in the White House won't allow a merger of this size without major concessions.

 

I do disagree with everyone about the price. It's likely RCL would fetch $40/share. $35/share is only 15 times earnings, a HUGE bargain. A companies current share price will not necessarily mean the shareholders will approve.

 

As I said it's fun to speculate.

[ocngypz]

Companies frequently buy their competitors and then sell off each brand.......bit.. by bit.. by bit.

 

Gee.. I'd love to get $35 a share............

[Silvery Seas Cruiser]

From someone who is quite uninformed in these areas, I just wonder how Carnival could raise that much financing in these difficult times for such matters. If they try to raise capital by selling off something such as Cunard, just as an example, who could buy it in these times for the same reasons, tight financing?

 

RCCL has so much debt now with the cost of building Oasis and Aluure. Why would Carnival want to take on that much debt?

 

Then there are NCL and Disney. I can't imagine either one of those cruiselines would happily greet the news of a Carnival buyout of RCCL.

 

I want to believe and prefer to believe that the article was just something someone threw out there on the iNternet to stir up notoriety for their web site or some similar motivation.

[SherriZ366]

I'm not that familiar with NCL's parent but didn't NCL have to cancel the twin to the Norweigan Epic? So that company might not be looking to pick up another cruise line or 2.,

[TBSCruiser]

All I know is Princess was never the same after it was bought, please don't let it happen to RCCL.

[SherriZ366]

All I know is Princess was never the same after it was bought, please don't let it happen to RCCL.

totally agree. and prices would really rise if there was a monopoly.

[crusinmama06]

Ok I think I just passed out for a second. :eek:

 

And now that I have come to, WHAT?????? :eek:

[Gonzo70]

Sounds like a rumor was planted by... Pick your poison.

 

RCI does not appear to be in any great difficulty. The economy has an impact on this industry just like any other. It's trading at 6X earnings, probably below average, but it indicates the market expects earnings to be flat at best. S&P and other analysts have them at HOLD. Hardly a ringing endorsement, but it reflects future prospects of RCI.

 

2.8 Billion market cap for RCI, vs 5.6 Billion for Carnival. They could do it at $35. It's not even a stretch Share Price 15.24 - 39.60, 11/20/08 - 8/11/08.

 

Don't count on the justice department. Cruise ships are in competition with all other forms of travel and vacations. Plus they would probably sell off Celebrity to satisfy justice.

 

Probably more to come.

 

No, there will be no more to come. This article was either purposeful misinformation or (more likely) the author misunderstood and/or misinterpreted something they heard. Also, I am not sure where you are getting your numbers. CCL is much bigger than RCL. Their market cap is over 21 billion dollars - not the 5.6 billion number you referenced. I am also not sure what the 52-week price range of RCL has to do with what current price they could fetch. They suffered a loss last quarter and although they will have a profit this quarter, it will be some time (if ever) before they will earn numbers to justify a $30 to $40 stock price. No company in this current economic environment would even consider taking over a company with such massive debt combined with dwindling growth. Even if the antitrust issues was not there, CCL likely would have no interest in purchasing RCL at even a small premium to the current price. The article was simply stating a false rumor that has not even an inkling of truth.

[barbie5401]

Good book to read - "Devils in the Deep Blue Seas" it is on amazon it is an older book - but it explains how the leaders of Carnival got so big and the fights between RCCL and Carnival for Cunard and other lines. I found the book very interesting. It goes back to the 1950's until today. A gentlemen I had lunch with in the MDR on a cruise suggested it and I really enjoyed reading it.

[MrPete]

I've always wished to have a Carnival experience on a RCI ship. Maybe some day that wish will come true. :)

 

As well as reducing those CRAZY fares.

[MrPete]

 

Hopefully with a new administration in place, they will see beyond the greed of corporate America and realize that such an acquisition would be nothing but detrimental to the industry and consumers. The only people that would really benefit are the high stakes stock holders, and haven't we seen enough of that over the past several years?

 

Hey, maybe if Carnival can't get it, there will be a bailout.

 

Just think about it:

 

WHITE HOUSE LINES

[EBFURR]

I think it would be more likely that Disney would add RCL to its holdings than Carnival though I can't see anyone wanting to touch Royal since Oasis' could very likely turn out to be a huge failure --------BT

 

I have been watching this Oasis/Allure thing since the beginning. My impression is that there is plenty of capacity, bordering on excess capacity, in the cruise business these days. The Voyager class was a brilliant move in the 1990's and the Freedom class slightly less so. When the Oasis was being conceived RCI was estimating continued growth in cruise demand on a curve that resembled the 1990's and gambled on being able to fill these huge ships. In order for the cruise lines to profit, the ships must sail essentially full every sailing. It is already becoming difficult for RCI to fill the existing fleet every week even without the two giants. Add the fact that the debt load incurred due to the financing of the two behemoths is so huge and it might be better to call the Oasis "Albatross of the Seas".

RCI is strapped for cash at the moment, hence the low stock price and cutbacks. RCI’s future literally hinges on the success of the Oasis and Allure. If they enter service and sail full, the company will survive. If not, it could mean the end of RCI as we know it. One important “innovation” of the Oasis class is the sheer number of extra charge amenities on board. This is an ambitious expansion of the “pay as you go” versus the “inclusive” style of cruising that the industry was built on. They are depending upon consumer acceptance of that revenue model to justify the huge investment in the ships. The success of this venture is by no means guaranteed. It could possibly be the wrong move at the wrong time. On the other hand, if the two ships succeed in capturing the public’s fancy like the Voyager class did 10 years ago it could turn out to be another stroke of brilliance.

It is entirely possible that CCL sees this as RCI’s weakest and most vulnerable moment. The Oasis issue is still up in the air and the economy seems poised for a comeback (if the Obama administration can be kept in check) so this might be the perfect time to strike a deal. It does seem unlikely that the deal could pass muster with the regulators, but I have seen some really crazy deals being made in industry and banking over the past 20+ years so nothing surprises any more.

Those who fear that prices would immediately go up should remember that price is driven by demand. The merging of the two companies would neither increase nor the cruise ship capacity in the short run. They would still need to fill all the ships every week and raising prices across the board would not help accomplish that. A more likely scenario would be lower prices accompanied by a more diluted product. If you are among the “just get me on a ship, that’s all that matters” crowd this might be a good thing. We prefer a great experience at a fair price, which was the RCI model for many years.

I have no idea how much validity this story has, but it could be credible on some basis. If not, it provides an intriguing basis for discussion.

[02143]

Sounds like a rumor was planted by... Pick your poison.

 

RCI does not appear to be in any great difficulty. The economy has an impact on this industry just like any other. It's trading at 6X earnings, probably below average, but it indicates the market expects earnings to be flat at best. S&P and other analysts have them at HOLD. Hardly a ringing endorsement, but it reflects future prospects of RCI.

 

HOLD is about as negative as most assessments get, though. Analysts are very wary of rating something a SELL unless everyone knows the company is going down the toilet.

[steveru621]

No, there will be no more to come. This article was either purposeful misinformation or (more likely) the author misunderstood and/or misinterpreted something they heard. Also, I am not sure where you are getting your numbers. CCL is much bigger than RCL. Their market cap is over 21 billion dollars - not the 5.6 billion number you referenced. I am also not sure what the 52-week price range of RCL has to do with what current price they could fetch. They suffered a loss last quarter and although they will have a profit this quarter, it will be some time (if ever) before they will earn numbers to justify a $30 to $40 stock price. No company in this current economic environment would even consider taking over a company with such massive debt combined with dwindling growth. Even if the antitrust issues was not there, CCL likely would have no interest in purchasing RCL at even a small premium to the current price. The article was simply stating a false rumor that has not even an inkling of truth.

 

Jeeesh, lighten up!

 

You are right, CCL has this wierd stock arragement with two symbols (CUK and CCL) that I did not add together for market cap. The point was CCL is bigger. The 2.68/share for 2008 came from Standard and Poors with a loss of .17 cents a share for first quarter. 2009 Second quarter Estimates: 0.03 | -0.114 | -0.31 (High | Mean | Low).

 

But, close the thread the all knowing one has spoken. Almost sounds like your feelings were hurt. Do you work for RCL?

[Gonzo70]

But, close the thread the all knowing one has spoken. Almost sounds like your feelings were hurt. Do you work for RCL?

 

No I do not work for RCl and no my feelings were not hurt. I just don't understand why some on this thread are misleading others by discussing this as though it was an article of substance. The article was 100% false; whether it was purposely false (i.e. intended to mislead) or simply a mistake I do not know and do not care. This thread is the equivalent of somebody finding something on the internet saying that the Unites States and Canada are going to merge into one country, posting a link, and then several people speculating on how this might be possible. The only way CCL acquires RCL ships is if the economy worsens and stays down long enough that RCL goes out of buisness; in that scenario CCL would buy up select RCL ships on the cheap. CCL is in much better position to whether a prolonged economic downturn (largely due to a much lower debt load). However most likely RCL will weather the recession and things will go on as normal for at least the next several years.

[Freo]

>>I'm not that familiar with NCL's parent but didn't NCL have to cancel the twin to the Norweigan Epic?<<

 

Yes, by the CNBC show Cruise Inc, Peter Greenberg did say that the 2nd ship was scrapped.

[EBFURR]

No I do not work for RCl and no my feelings were not hurt. I just don't understand why some on this thread are misleading others by discussing this as though it was an article of substance. The article was 100% false; whether it was purposely false (i.e. intended to mislead) or simply a mistake I do not know and do not care. This thread is the equivalent of somebody finding something on the internet saying that the Unites States and Canada are going to merge into one country, posting a link, and then several people speculating on how this might be possible. The only way CCL acquires RCL ships is if the economy worsens and stays down long enough that RCL goes out of buisness; in that scenario CCL would buy up select RCL ships on the cheap. CCL is in much better position to whether a prolonged economic downturn (largely due to a much lower debt load). However most likely RCL will weather the recession and things will go on as normal for at least the next several years.

 

Wow, that is a very self confident viewpoint. Forums are intended for people to discuss things of interest to them. Some people find this particular topic interesting, whether it has great substance or not. No one is misleading anyone; we are just expressing opinions and conjecture as are you. If you find the discourse offensive or annoying, you could simply avoid clicking on the link. Your points regarding the original topic are not without merit, however it is not really necessary to demean opinons with which you do not agree in order to make your point.

 

By the way, I heard that the US and Mexico are going to merge. It is Obama's way of dealing with the illegal immigration problem.

[aurelius180]

wow, that is a very self confident viewpoint. Forums are intended for people to discuss things of interest to them. Some people find this particular topic interesting, whether it has great substance or not. No one is misleading anyone; we are just expressing opinions and conjecture as are you. If you find the discourse offensive or annoying, you could simply avoid clicking on the link. Your points regarding the original topic are not without merit, however it is not really necessary to demean opinons with which you do not agree in order to make your point.

 

By the way, i heard that the us and mexico are going to merge. It is obama's way of dealing with the illegal immigration problem.

 

:):)