Norwegian Cruise said to be near US$3b Prestige Cruises deal
Purchase will give operator access to ships, clientele
[NEW YORK] Norwegian Cruise Line Holdings Ltd, the world's third largest cruise operator, is in advanced talks to acquire peer Prestige Cruises International Inc for around US$3 billion, according to people familiar with the matter.
A deal would give Norwegian Cruise, a company with a market value of US$6.8 billion, access to Prestige Cruises' luxury cruise ships and affluent clientele as it competes with bigger rivals Royal Caribbean Cruises Ltd and Carnival Corp.
An agreement may be announced as early as this week, the sources said on Sunday, cautioning that the talks could still fall apart. The owner of Prestige Cruises, private equity firm Apollo Global Management LLC, also owns a 20 per cent stake in Norwegian Cruise.
The sources asked not to be identified because the negotiations are not public. Norwegian Cruise and Prestige Cruises representatives did not respond to requests for comment, while an Apollo spokesman declined to comment.
Miami-based Norwegian Cruise operates 13 cruise ships in routes spanning North America, the Mediterranean, the Baltic, Central America and the Caribbean. It had revenues of US$2.57 billion last year, up 13 per cent from 2012.
Prestige Cruises, also based in Miami, operates under the Oceania and Regent brands, which together have eight cruise ships travelling to Scandinavia, Russia, the Mediterranean, North America, Asia, Africa and South America. It posted revenues of US$1.2 billion last year, up 6 per cent from the year earlier.
The US$29 billion cruise industry is expected to benefit in the coming years from the rise of the middle class in emerging economies such as China and India. Companies are racing to position themselves as the cruise operators of choice for these new customers.
Prestige Cruises registered with US regulators for an initial public offering in January this year. Apollo has been the company's majority shareholder following an US$850 million deal in 2007.
Norwegian Cruise was created in its current form in 2000 through a merger with a cruise operator owned by Genting Bhd, the leisure and casino conglomerate controlled by Malaysian billionaire Lim Kok Thay. Apollo made a US$1 billion investment in Norwegian Cruise in 2008.
Norwegian Cruise went public in January 2013. Genting had a 28 per cent stake, Apollo had a 20 per cent stake and private equity firm TPG Capital LP had an 8 per cent stake in the company as at the end of June, according to a regulatory filing.
Carnival, Royal Caribbean Cruises and Norwegian Cruise together account for 82 per cent of the North American cruise passenger berth capacity, according to Prestige Cruises' initial public offering registration document. - Reuters
