Norwegian Cruise To Buy Prestige Cruises In $3.0 Bln Deal

(RTTNews) - Cruise operator Norwegian Cruise Line Holdings Ltd. (NCLH) agreed Tuesday to acquire peer Prestige Cruises International, Inc. in cash and stock deal valued at $3.025 billion, including assumed debt. An additional contingent cash consideration of up to $50 million will also be payable to Prestige shareholders upon achievement of certain 2015 performance metrics.

In Tuesday's pre-market trades, Norwegian Cruise shares are surging nearly 16 percent.

"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. 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," Norwegian Cruise CEO Kevin Sheehan said in a statement.

Prestige Cruises is the market leader in the upscale cruise segment and parent company of segment-leading brands Oceania Cruises and Regent Seven Seas Cruises. It operates eight ships with about 6,500 berths.

Regent Seven Seas Cruises is the market leader in the luxury cruise segment with three ships, while Oceania Cruises is the market leader in the upper-premium cruise segment with five ships.

Formed in 2007 to manage select assets in Apollo Management's cruise investment portfolio, Prestige Cruises is led by Chairman and CEO Frank Del Rio, the founder of Oceania Cruises.

The proposed deal will immediately create an industry-leading cruise operator with leading global cruise brands across market segments. Norwegian Cruise said the deal enhances its already best-in-class financial metrics.

The deal will enable Norwegian Cruise to compete with larger rivals such as Royal Caribbean Cruises Ltd. (RCL) and Carnival Corp. (CCL) with a more diversified portfolio by adding the upper premium and luxury brands of Prestige Cruises.

The company said it is fully committed to retaining the brand propositions, guest experiences and cultures of the Norwegian, Oceania and Regent brands. Meanwhile, Frank Del Rio will remain chief executive officer of Prestige Cruises.

A transaction committee was formed in early July, which was delegated it full authority to negotiate and approve a transaction. The transaction committee, who retained its own financial and legal advisors, has unanimously approved the transaction.

Norwegian Cruise noted that the deal will be immediately accretive to earnings without synergies, with initial $25 million of synergies resulting in high single-digit percentage adjusted earnings per share accretion.

The deal, subject to regulatory approvals, is expected to close in the fourth quarter of 2014.

Miami, Florida-based Norwegian Cruise will fund the deal with existing cash, new and existing debt facilities and the issuance of about 20.3 million shares of its common stock, which has been approved by holders of a majority of Norwegian's common stock.

Barclays, J.P. Morgan Securities LLC and Deutsche Bank have provided committed financing to Norwegian to support the acquisition.

"We are excited to become part of the Norwegian family and start a new chapter for our company. 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 stated.

NCLH closed Friday's regular trading session at $33.31, up $0.21 on a volume of 0.47 million shares. In Tuesday's pre-market trades, the stock is surging $5.19 or 15.58% to $38.50.