Tuesday, 2 September 2014

What next for Regent Seven Seas and Oceania Cruises after $3bn takeover by Norwegian?

Kevin Sheehan: Oceania and Regent will retain their separate identities


The deal in which Norwegian Cruise Line has spent more than $3bn (£1.8bn) to buy the company which operates Oceania and Regent Seven Seas amounts to much more than simply adding 6,500 berths to the total fleet capacity.

If that’s all Norwegian wanted to do, they could have simply built a couple more mega-ships for far less money. (And they are already doing that with Norwegian Escape under construction with more to follow).

No, the takeover of Prestige Cruises International transforms Norwegian from a one-brand, one-trick pony into a much more complete cruise operator.

Having already turned the company’s fortunes round, CEO Kevin Sheehan has put himself on equal footing with the top men at his biggest rivals, Carnival Corporation and Royal Caribbean. It’s a fascinating development for a man who once ran car hire company Avis – which for 50 years ran the slogan “We Try Harder” because it was always behind market leader Hertz.

The addition of the two luxury cruise brands might still leave Norwegian in third place overall in the global cruise market, but it now has a much stronger base on which to compete against Seabourn and Cunard in the Carnival fold, and Celebrity and Azamara at Royal Caribbean.

Commenting on the deal, Sheehan said: "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.”
It paved the way, he added, “for new cross-selling opportunities, cross-brand collaboration, cross-business support … and partnerships.” Around $20 million operational savings have been identified already but the deal does not signal the disappearance of the Regent and Oceania names.
Sheehan pledged the brands would continue to retain their separate identities, saying: “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.”
On top of the $3.025bn deal, Prestige shareholders can look forward to a further $50m payout if financial targets are met in 2015.
"We are excited to become part of the Norwegian family and start a new chapter for our company," said Frank Del Rio, who stays on as 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."