TUI Sells 50 Pct Stake in Hapag-Lloyd Cruises to Royal Caribbean
- Business & Finance
Germany’s TUI Group has signed an agreement to sell a 50 percent stake in cruise line Hapag-Lloyd Cruises to the US-based cruise major Royal Caribbean.
The parties signed a joint venture profit-sharing agreement in Hamburg on February 7, 2020.
The transaction, expected to close this summer, is valued at EUR 1.2 billion (about USD 1.3 billion).
As informed, the former TUI Group subsidiary will be integrated into the TUI Cruises joint venture, a “successful structure” having been established by TUI and Royal Caribbean since 2008.
Under the joint venture profit-sharing agreement, TUI will report 50 percent of Hapag-Lloyd Cruises’ earnings.
“The integration of Hapag-Lloyd Cruises in the joint venture will allow TUI to participate in global cruise industry growth at a low level of capital expenditure,” TUI said in a statement.
TUI Group added it would use the transaction proceeds to strengthen the group’s balance sheet and to drive its transformation into a digital organization.
The merger of TUI Cruises and Hapag-Lloyd Cruises under the umbrella of the joint venture is to create a leading European cruise company with a current combined fleet of twelve ships. Specifically, TUI Cruises will continue to cater to the premium German-speaking segment and Hapag-Lloyd Cruises will continue to have an exclusive presence in the luxury and expedition ship segment.
“The ships’ identities, service, quality and customer experience will remain as individual and unique as they are today. This will create significant advantages for the Group, for our expansion and for our investments,” Fritz Joussen, TUI CEO, said.
Hapag-Lloyd Cruises provides luxury and expedition cruises in German-speaking markets. Its fleet currently consists of two luxury ships and three expedition cruise ships. A further expedition cruise ship has been ordered and will be added to Hapag-Lloyd Cruises’ fleet in 2021 to replace MS Bremen. In light of the transaction, it is possible that the luxury and expedition fleet will grow in the coming years.
“Products and brands such as MS Europa and MS Europa 2 have international potential and appeal. Going forward, this will enable us as shareholders to take a capital-light approach to financing the ships and international growth within a joint venture framework.”
“TUI and Royal Caribbean Cruises have developed the joint venture company on the basis of a strong partnership over the past ten years. The expansion decision is the next big step of growth for us – from a strategic and a commercial perspective,” Fritz Joussen concluded.