Norwegian said to be in talks to buy Prestige Cruise Holdings

A Reuters report says Norwegian Cruise Line is in advanced talks to acquire Prestige Cruise Holdings, the parent company of Regent Seven Seas Cruises and Oceania Cruises.

The report, citing unnamed sources, said the deal is worth $3 billion and could be announced as early as next week.

Prestige Cruise Holdings filed to offer shares to the public in January, but the deal has not come to market despite a general rise in equities this year.

Norwegian and Prestige share a common owner, the private equity firm Apollo Global Management, which has a 20% stake in Norwegian and owns a majority of Prestige.

If Norwegian would acquire Prestige, the Prestige brands would likely operate independently with continued separate sales and marketing organizations.

The acquisition would be an alternate way for Apollo to receive some cash back from its 2007 investment of $850 million in Prestige.

In the past, Norwegian CEO Kevin Sheehan has indicated he thought his company’s best growth would come from continued investment in the Norwegian brand rather than starting or acquiring additional brands, which has been the strategy at Norwegian’s two publicly owned competitors, Carnival Corp. and Royal Caribbean Cruises Ltd.

Norwegian has 13 ships in its fleet. Regent has three with a fourth due in 2016, and Oceania has five.

Regent’s all-inclusive strategy makes it popular with travel agents, who can earn commission on shore excursions, drinks and other items that fall outside the fare on other lines and therefore don’t lead to commission revenue.

Norwegian and Prestige representatives did not respond to requests for comment from Reuters, while an Apollo spokesman declined to comment.

After Apollo entered the cruise industry with its takeover of Prestige in 2007, it invested another $1 billion in 2008 to buy into Norwegian.

Although it has a 20% stake in Norwegian, Apollo effectively controls Norwegian through its power to nominate six of the 11 members of the board of directors. Genting Hong Kong Ltd. and TPG Pacific also have representatives on the board.
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Follow Tom Stieghorst on Twitter @tstravelweekly.