Norwegian Cruise Line Holdings Ltd share price soars, to buy Prestige for $3bn

Norwegian Cruise Line Holdings, the worlds third-largest cruise operator, announced it has reached an agreement to acquire rival Prestige Cruises International for about $3 billion, adding eight luxury ships to its fleet and sending its share soaring.

Oceania Cruises, one of two brands operated by Prestige, is the market leader in the upper-premium cruise segment, while 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, the company statement read.

“The acquisition of Prestige represents an extraordinary opportunity for Norwegian to expand our market presence by adding two established, award-winning brands in the upscale cruise segment,” said Kevin Sheehan, Norwegian Cruise Lines chief executive officer. “Our complementary strengths and skillsets will pave the way for new opportunities … [and] will provide solid accretion to earnings per share and drive long-term shareholder value.”

The deal is subject to regulatory approval. Apollo Global Management LLC, which owns Prestige, also owns the biggest single stake at Norwegian, some 20%, is a private equity firm, with deep interest in the cruising industry. Combining its major assets, it would better compete with Carnival Corp. and Royal Caribbean Cruises, the cruise market leaders.

“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.”

Norwegian Cruise Line Holdings Ltd had added 11.74% by 13:52 GMT in New York today to trade at $37.22 per share. The company had a market value of $6.77bn as of the previous close. According to a Financial Times survey, 13 analysts offering 12-month price targets for Norwegian Cruise Line Holdings Ltd have a median target of $38.00, with a high estimate of $44.00 and a low estimate of $35.00. The median estimate represents a 14.08% increase from the last price of $33.31.