MIAMI — Royal Caribbean Cruises Ltd. is laying out US$1 billion for a 66.7% stake in privately-owned Silversea Cruises in a deal that will set the luxury and expedition cruise brand on a course for continued success, say both companies.
The agreement is based on an enterprise value of some $2 billion and RCCL will finance the purchase through debt. Silversea Cruise Chairman Manfredi Lefebvre D’Ovidio will qualify for some 472,000 RCL shares, payable upon achievement of select 2019-2020 performance metrics.
“Silversea is a crown jewel, and the acknowledged leader in luxury and expedition cruising, two key markets that are poised for growth,” said Richard D. Fain, Chairman and CEO of Royal Caribbean Cruises Ltd. “Uniting our two companies presents an extraordinary opportunity to expand vacation options for guests and create revenue in strategic growth areas.”
Lefebvre will stay on as Executive Chairman of Silversea, continuing to lead its strategy long term. Silversea’s CEO Roberto Martinoli will also continue in his role, working with the existing Silversea management team.
Silversea Cruises was founded in 1994 by Lefebvre’s father. “This partnership will bolster the growth of this exceptional brand founded by my father,” said Lefebvre. “I have always been kindred spirits with Richard and we share a vision of offering excellence and leadership to our guests. This new partnership gives Silversea the opportunity to accelerate the growth of the most successful luxury and expedition cruising brand in the world.”
The goals of the new partnership include:
- Drive long-term capacity growth in the luxury and expedition markets at a much larger scale than what Silversea would achieve independently;
- Diversify Royal Caribbean’s portfolio and increasing its expedition offerings by adding a premiere ultra-luxury brand;
- Leverage the global footprint of the combined companies to generate demand and increase vacation and destination options for the guests of both companies; and
- Create significant synergies related to global market access, supply chain, purchasing power and other economies of scale.
Lefebvre and Fain say Silversea, with its all-suite ships sailing to more than 1,000 global destinations, as well as its luxury expedition vessels, adds a pioneering ultra-luxury brand to RCL’s industry-leading brand lineup, including RCL’s largest brand, Royal Caribbean International, premium brand Celebrity Cruises and destination immersive brand Azamara Club Cruises.
The deal is expected to close later in the year, subject to customary closing conditions and regulatory approvals.
RCCL’s forecast for Q3 and Q4 2018 remains unchanged, but increases in the market price of fuel and the strength of the dollar are expected to cost the company some 25 cents per share. Strong close-in demand for core products and better than expected performance below the line is expected to drive improved results for Q2 and these improved results are expected to completely offset the impact of fuel headwinds in the second half of the year, allowing the company to maintain its financial projections for 2018.
