Norwegian Cruise Line Holdings Ltd. today announced it has entered into a definitive agreement to acquire Prestige Cruises International, Inc. (“Prestige”), the market leader in the upscale cruise segment and parent company of Oceania Cruises and Regent Seven Seas Cruises, in cash and stock for a total transaction consideration of $3.025 billion, including the assumption of debt.

“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,” said Kevin Sheehan, Norwegian Cruise Line’s chief executive officer. “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.  Our complementary strengths and skillsets will pave the way for new cross-selling opportunities, cross-brand collaboration, cross-business support, as well as joint partnerships which, coupled with meaningful synergies that can be quickly implemented, will provide solid accretion to earnings per share and drive long-term shareholder value,” added Sheehan.

“We are excited to become part of the Norwegian family and start a new chapter for our company,” said Frank Del Rio, 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.”

Prestige operates eight ships and approximately 6,500 berths under two segment-leading brands.  Oceania Cruises is the market leader in the upper-premium cruise segment with five ships offering destination-oriented cruise vacations to more than 330 ports around the globe, gourmet culinary experiences, elegant accommodations and personalized service.  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. Regent offers the industry’s most inclusive luxury vacation experience visiting over 250 destinations worldwide.  Frank Del Rio will remain chief executive officer of Prestige.

“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.”

Transaction Rationale

The compelling rationale to acquire Prestige includes:

•  The diversification of cruise market segments by adding upper premium and luxury brands;

•  The further enhancement of industry-leading financial metrics;

•  Opportunities for synergies and the sharing of best practices among brands;

•  An increase in economies of scale providing greater operational leverage;

•  The expansion of growth trajectory and global footprint; and

•  The opportunity to complement Norwegian’s new build program with the existing Regent order that provides measured, orderly capacity growth through 2019.

Transaction Details

The total transaction consideration of $3.025 billion includes the assumption of debt.  Additionally, a contingent cash consideration of up to $50 million to Prestige shareholders would be payable upon achievement of certain 2015 performance metrics.

In early July, Norwegian’s Board of Directors formed a Transaction Committee and delegated it full authority to negotiate and approve a transaction.  The Committee consisted entirely of disinterested directors.  Genting Hong Kong Limited and certain funds affiliated with TPG Capital, each of whose consent was required pursuant to Norwegian’s existing shareholders’ agreement have consented to the transaction.  The Transaction Committee, who retained its own financial and legal advisors, has unanimously approved the transaction.  The transaction is subject to regulatory approvals and other customary closing conditions and is expected to close in the fourth quarter of 2014.

Norwegian will finance the acquisition with existing cash, new and existing debt facilities and the issuance of approximately 20.3 million shares of its common stock.  Pursuant to the requirements of NASDAQ Rule 5635, holders of a majority of Norwegian’s common stock have consented to the issuance of such shares.

Barclays is acting as lead financial advisor to Norwegian, Deloitte Consulting, LLP is acting as diligence advisor and Weil, Gotshal & Manges LLP is providing legal counsel.  UBS Investment Bank is acting as financial advisor to Prestige and Paul, Weiss, Rifkind, Wharton & Garrison LLP is providing legal counsel.  Perella Weinberg Partners is acting as financial advisor to the Transaction Committee of the Norwegian Board of Directors and Cravath, Swaine & Moore LLP is providing legal counsel.  J.P. Morgan Securities LLC and Deutsche Bank are also serving as financial advisors to Norwegian.  Barclays, J.P. Morgan Securities LLC and Deutsche Bank have provided committed financing to Norwegian to support the acquisition.