Royal just became more luxurious
On Thursday, Royal Caribbean Cruises announced its purchase of privately-owned Silversea Cruises. The deal is worth roughly $2 billion and will give Royal Caribbean a 66.7% stake in Silversea.
Royal has stated that it will finance the acquisition through debt. Additionally, Silversea Chairman Manfredi Lefebvre d’Ovidiowill acquire 470,000 shares of Royal (RCL), which has a total value of $53 million as of Friday. Indeed, after the announcement on Thursday, Royal’s stock price jumped 5%.
The deal will give Royal Caribbean a new fleet of high-luxury cruise ships. Moreover, Royal has certain high-end options, like their $3,000 tickets for Azamara Club Cruises; however, this doesn’t come close to touching Silversea, which sells tickets for over $5,000.
Further, this acquisition will prove to benefit both Royal and Silversea. Royal CEO Richard Fain admitted that their company had been missing luxury ships as an option for a while. To diversify their offerings to consumers, this was the best decision. And for Silversea, d’Ovidio stated that although the company would continue to grow, the price Royal paid was far more than he could have ever achieved by himself.
According to Cruise Market Watch, the cruise industry is expected to bring in $45.6 billion of revenue – a 4.6% increase over last year. Thus, the market is continuing to expand, and Royal will reap the benefits of that.
The economy is strong right now, and consequently, people are willing to pay more for leisure items like cruises. This trend will likely continue as the economy continues to succeed, and Royal Caribbean will see that this decision was brilliant.
Featured image via Flickr/Roderick Eime