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Norwegian reported in advanced talks to buy Prestige Cruises

Norwegian reported in advanced talks to buy Prestige Cruises
Update: Tuesday pre-session trading in NCLH shares was halted on the NASDAQ, pending the release of material news. Norwegian Cruise Line may be close to acquiring Prestige Cruises International, the parent of Oceania Cruises and Regent Seven Seas Cruises, in a deal valued at about $3bn, Reuters reported Sunday. Rumors that such a deal was in the works have been quietly circulating in recent months.

Citing unnamed sources familiar with the matter, Reuters said the talks are at an advanced stage and an agreement may be announced as early as this week. However, the news service said sources cautioned the negotiations could still collapse.

If the acquisition happens, it would fulfill what was envisioned at least as far back as 2007 when private equity giant Apollo Management paid $325m for a 60% stake in Oceania Cruises, then a three-ship line, and $1bn for a 50% share of NCL Corp. That was closely followed by Apollo and Oceania together acquiring Regent for a reported $1bn and setting up the Prestige holding company.

At the time, cruise industry and financial sources told Seatrade Insider they expected Apollo to eventually establish a company that grouped all three brands, though maintaining their separate identities, with the goal of taking that entity public.

As it happened, Norwegian launched a successful IPO in January 2013, initially offering 12% of its shares. Following several secondary offerings, Apollo now holds a 20% stake in Norwegian, while Genting Hong Kong has 28% and TPG Viking Funds 7.9%. This year Genting HK shareholders authorized the company to sell remaining shares in Norwegian from time to time, stating that this would give the flexibility to sell at the best possible price without needing to seek approval for each sale.

In January this year, Prestige Cruises International made an S-1 filing, indicating its intent to raise up to $250m. The amount of shares to be issued was not specified, however the filing said Apollo—which currently holds 59% of the shares—would continue to control a majority stake. 

Prestige currently fields eight ships totaling 6,442 berths between the Oceania and Regent fleets. The 750-berth Seven Seas Explorer is on order for 2016. The company is led by chairman and ceo Frank Del Rio, who also co-founded Oceania Cruises.

Norwegian has 13 ships in service and four newbuilds on order, with a total of 16,800 berths, for delivery in fall 2015, spring 2017, spring 2018 and fall 2019. Kevin Sheehan serves as president and ceo.

A combination of Norwegian and Prestige would create a company with brands in the contemporary, upper premium and luxury cruise segments.

Some time ago, sources told Seatrade Insider both Del Rio and Sheehan were expected to continue if an acquisition is finalized.

Norwegian and Prestige spokespeople did not respond to emails over the US holiday weekend.

NCLH closed at $33.19 on Friday.