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Royal Caribbean Group selling Azamara to private equity firm

The deal includes the brand and its three ships. The Azamara team will remain intact, and Carol Cabezes is promoted to president
Royal Caribbean Group reached a definitive agreement to sell its three-ship Azamara brand to Sycamore Partners, a private equity firm, in a $201m all-cash deal.

Sycamore Partners is buying the brand, fleet and associated intellectual property. The Azamara team will remain intact, and Chief Operating Officer Carol Cabezas will become president. Following a transition period, the approximately 100 Azamara shore-based employees are likely to relocate from Royal Caribbean headquarters to somewhere else in Miami.

The amount of the transaction is subject to certain adjustments and closing conditions, and the deal is expected to close in the first quarter.

Sharper focus

'Our strategy has evolved into placing more of our resources behind three global brands, Royal Caribbean International, Celebrity Cruises and Silversea, and working to grow them as we emerge from this unprecedented period,' Chairman and CEO Richard Fain said. 'Even so, Azamara remains a strong brand with its own tremendous potential for growth, and Sycamore’s track record demonstrates that they will be good stewards of what the Azamara team has built over the past 13 years.'

$170m impairment charge

The transaction will result in a one-time, non-cash impairment charge of approximately $170m, and is not expected to have a material impact on Royal Caribbean Group’s future financial results.

Though it amassed its own loyal following, Azamara also has some overlap with, primarily, Celebrity, and the group's more recent acquisition, Silversea. While Azamara grew from its original two ships to three in 2018 under former President/CEO Larry Pimentel, who crafted a destination-intensive brand identity, all are pre-owned vessels (originally part of the R series for Renaissance Cruises). No newbuilds were planned.

In contrast, a dozen newbuilds are currently in the books for the group's other brands — six for Royal Caribbean, three for Celebrity and three for Silversea.

Sycamore Partners

Sycamore Partners is a New York-based private equity firm specializing in retail and consumer investments, with approximately $10bn in committed capital. Azamara is its first cruise investment and apparently its first travel-related investment.

Among Sycamore's holdings are NBG Home (home decor), Belk (department stores); Coldwater Creek, Talbots and The Limited (women's apparel); Aeropostale (teen apparel), Nine West and Stuart Weitzman (footwear), Pure Fishing (fishing tackle), Staples (business supplies), CommerceHub (e-commerce platform) and Hot Topic and Torrid (music and pop culture items). The company exited a planned acquisition of Victoria's Secret earlier this year. 

'We are pleased that Royal Caribbean Group has entrusted Sycamore to support Azamara in its next phase of growth,' said Stefan Kaluzny, managing director of Sycamore Partners. 'We are excited to partner with the Azamara team and build on their many years of success serving the brand’s loyal customers. We believe Azamara will remain a top choice for discerning travelers as the cruising industry recovers over time.'

Azamara’s value proposition and operations are expected to remain consistent under the new owner, and Royal Caribbean Group said it will work in close collaboration on a seamless transition for employees, customers and other stakeholders.

Carol Cabezas' direct reports

About 100 people are currently with the Azamara brand shoreside. Direct reports to Cabezas include Francisco Mallmann, VP strategy and finance; Nils Lindstad, AVP sales and trade support; Scott Daniels, AVP hotel operations; Patty Gonzalez, director of global marketing and public relations; Gina Dunnett, director, land product development; and Signe Bjørndal, director, entertainment and on-board cruise sales. Though he is not a direct report, another prominent team member is Mike Pawlus, director of strategic itinerary and destination planning. 

20-year-old ships

The 690-passenger Azamara Journey, Azamara Quest and Azamara Pursuit each measure just over 30,000gt. The ships were built in 2000 and 2001.

They are currently in Glasgow at the King George V dock, where they've spent the bulk of their layup period.

Perella Weinberg Partners LP served as financial advisor to Royal Caribbean Group and Freshfields Bruckhaus Deringer LLP provided legal counsel. Kirkland & Ellis LLP provided legal advice to Sycamore Partners.