Ctrip and RCCL plan joint venture to manage Celebrity Century, explore deepening cooperation

Ctrip, the Chinese travel company that acquired the 1995 built Celebrity Century of Celebrity Cruises unit of Royal Caribbean Cruises Ltd (RCCL), says the two companies plan a joint venture agreement and the ship will be refurbished

“Ctrip has entered into a Memorandum of Understanding with Royal Caribbean Cruises Ltd. to form a joint venture to manage the operations of the acquired cruise ship and potentially broaden the relationship,” Ctrip said in a statement.

"China is becoming one of the largest cruise markets in the world," said Min Fan, Vice Chairman of the Board and President of Ctrip. "As the largest cruise agency in China, Ctrip has sent over 120,000 guests to cruise trips so far and acquired more than 10% of market share in China. We are excited about the strong growth of the cruise industry and strive to strengthen our leadership in this market.

"We are thrilled about our acquisition of Celebrity Century, which is one of the top-tier vessels in the world," Min Fan continued," Century will be renovated to provide an outstanding cruise experience to China's leisure travelers, including premium hotel services, diversified dining options, exciting on-board facilities, varieties of entertainments, and inspiring excursions and tours.”

“ Ctrip will capitalize on our strong brand, large customer base, and superior service quality, as well as our partner's extensive cruise operating experience to generate great value to our customers and shareholders."

Royal Caribbean Cruises Ltd. to sell Celebrity Century to Ctrip

Royal Caribbean Cruises Ltd. announced today that it has entered into an agreement to sell its cruise ship Celebrity Century to Exquisite Marine Ltd., a holding company led by Ctrip.com International Ltd. (NASDAQ: CTRP).  The sale will result in a non-cash loss of approximately $20 million dollars. This loss will be excluded from our adjusted net income in our third quarter results. Royal Caribbean Cruises Ltd. will continue to operate Celebrity Century until April 2015.

"Since its inaugural sailing, Celebrity Century has created many wonderful memories for hundreds of thousands of guests, and we expect this successful history to continue as she transitions to the Chinese cruise market," said Richard D. Fain, chairman and chief executive officer of Royal Caribbean Cruises Ltd.  "The vessel's sale is an excellent business opportunity for both Royal Caribbean and Ctrip, and will generate strong value for both companies' shareholders."

Celebrity Century will complete its scheduled sailings through the March 22, 2015, itinerary. The 15-night, Dubai to Rome sailing on April 5, 2015 is being redeployed to a 14-night sailing from Dubai to Singapore. Guests with affected individual bookings and named group bookings on Celebrity Century's April 5, 2015 sailing from Dubai to Rome have the option to either cancel their booking and receive a full refund or move to an alternative sailing and receive a re-accommodation onboard credit as well as compensation to cover air change fees. Guests with reservations affected by the transition will be proactively contacted by Celebrity Cruises. Guests and Travel Agents with specific questions are welcome to call 1-888-283-7275.

Celebrity Century joined the Celebrity Cruises fleet in December 1995, and was built by Meyer Werft in Papenburg, Germany. The 71,545-ton ship carries 1,814 guests (double occupancy) and 860 crew.

Earlier Celebrity Century was expected to join CDF next spring to operate in the French market.

Ctrip.com International, Ltd. is a leading travel service provider of accommodation reservation, transportation ticketing, packaged tours, and corporate travel management in China. Ctrip aggregates accommodation and transportation information to enable business and leisure travelers to make informed and cost-effective bookings. Ctrip also helps customers book vacation packages and guided tours. In addition, Ctrip corporate travel management services help corporate clients effectively manage their travel requirements. Since its inception in 1999, Ctrip has experienced substantial growth and become one of the best-known travel brands in China.

Upper end of cruise market less focused on ship

The upper end of the premium market and the luxury market differ markedly from the contemporary market in terms of what is focal, said Kevin Sheehan, president and ceo of Norwegian Cruise Line Holding.

In the contemporaty market segment, in which the group's Norwegian Cruise Line brand operates, the ship itself and on board activities are focal to the guests. However, in the higher end of the market, the picture changes.

"Ship is not the focal pointof the guest experience," said Frank del Rio, chairman and ceo of Prestige Cruises. In the upper premium and luxury markets, outstanding service, fine food and calls at ports that allow passengers to truly see the world are more important, he said at a webcast conference call related to the acquisition of Prestige by Norwegian.

"These ships age like fine wine, provided that they are well maintained," Sheehan said, referring to the upper end of the market vessels. 

Prestige acquisition widens Norwegian group's market segments, geographical range and earnings base

The acquisition of Prestige Cruise Holdings will gve Norwegian Cruise Line Holdings a 46% stake in the upper end of the cruise market, said Kevin Sheehan, president and ceo of the Norwegian group.

Prestige is the parent company of Oceania Cruises that operates in the upper end of the premium market and Regent Seven Seas Cruises, which is a luxury operator.

Sheehan said that Norwegian had been transformed since 2008, when the private equity group Apollo acquired 50% stake in the company. As it now has delivered an improved EBITDA for 24 consecutive quarters, the time had come to expand it beyond the contemporary market segment of Norwegian Cruise Line.

The choice was between launching a new brand or an acquisition. To acquire Prestige was a natural choice as Apollo had acquired that company as well, so that the board and senior management of both management had close contacts.

The new three brand Norwegian group will cover the age range of passngers from families with small children to retired people and it also covers all segments of the industry. However, the passenger experience on each brand will not be affected.

The acquisition will also expand the geographical reach of Norwegian as vessels of Regent and Oceania call at ports which Norwegian does not visit at the moment. It will be financially accreditive from the start, Sheehan said.

Sheehan noted that the acquisition "married well" by bringing togetherthe best brands in their respective market segments and the best practises would be employed from each company. Norwegian Cruise Line itself would benefit as the acquisition opened the doors to agents that focus on the top end of the business, which are important for its Haven accommodation, but which it has had difficulties in reaching so far.

It's official: Norwegian Cruise Line Holdings Ltd. to acquire Prestige Cruises International, Inc. for $3.025 billion

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Frank Del Rio and Kevin Sheehan

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 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.