Silversea Gets Premium Enterprise Valuation

With Royal Caribbean Cruises’ announcement today that it is acquiring a majority stake in Silversea Cruises, Royal Caribbean is entering the luxury market, where it has largely been absent, but also the true expedition market, where its main competitors are largely absent.

In the deal, Royal will acquire a 66.7 percent equity stake in Silversea for approximately $1 billion based on an enterprise value of $2 billion, according to a prepared statement. That would value Silversea at more than $700,000 per berth, compared to Genting’s 2015 acquisition of Crystal at an estimated $250,000 per berth, according to the 2018-2019 Cruise Industry News Annual Report’s berth estimates.

In addition, Manfredi Lefebvre D’Ovidio, executive chairman of Silversea, will receive 472,000 Royal Caribbean shares if certain performance metrics are met for 2019 and 2020. At current share prices that will amount to more than $53 million.

Whether the enterprise evaluation estimate includes assumption of any debt was not announced. Royal Caribbean stated, however, that it will finance the purchase through debt.

For 2018, Silversea has an estimated annual capacity of 87,664 passengers aboard its nine ships, more than its immediate competitors — Seabourn, Regent and Crystal, but less than Viking Ocean, according to Cruise Industry News.

According to the 2018 Expedition Market Report, Silversea’s four expedition ships command 8.2 percent of the expedition market’s passenger capacity. 

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