Luxury cruise giant's $1.4b deal

Royal Caribean is best known for its mega ships such as the Ovation of the Seas. Photo / Silversea Cruises

US mega ship operator Royal Caribbean takes a majority stake in Silversea Cruises.

United States cruise giant Royal Caribbean has paid $1.4 billion for a majority stake in European ultra-luxury line Silversea Cruises.

Both companies have ships that visit New Zealand ports over summer and are expanding their presence here.

The Miami-based Royal Caribbean has about 21 per cent of the global cruise market and while much smaller, the family-controlled Silversea is described as the "crown jewel" of luxury and expedition cruising.

Royal Caribbean also has a small ship division, Azamara for boutique cruising.

But Royal is best known for its mega ships such as the Ovation of the Seas, which has visited New Zealand during the past two summers.

Royal is buying a 66.7 per cent stake in Silversea.

Manfredi Lefebvre d'Ovidio, executive chairman of Silversea Cruises, will stay on in the role.

"I had no interest in selling out completely. My goal was to see Silversea take advantage of the opportunities. Being with Royal gives us big opportunities in terms of fleet expansion, distribution and reach," he told the Herald.

The deal announced overnight was also a win for Silversea staff who now had new job opportunities.

"And last but not least it's a big win for Royal which has been recognised by the market today which rose by 6 per cent on the news."

Silversea chief executive Roberto Martinoli said the deal was complex.

"The idea behind the deal is that Royal did not have any presence in the ultra-luxury and expedition segment which is a segment of cruising that is doing quite well.

Australia and New Zealand was the third largest source market for Silversea - after the United States and Britain - and was growing rapidly.

Martinoli will continue in his role, working with the existing Silversea management team.

The deal is the latest partnership Royal has forged recently.

In the joint announcement, the companies say the strategic rationale for the partnership included:

●Driving long-term capacity growth in the burgeoning luxury and expedition markets at a much larger scale than Silversea would be able to achieve independently;

●Leveraging the global footprint of the combined companies to generate demand and increase vacation and destination options for the guests of both companies;

●Realising synergies related to global market access, supply chain, purchasing power and other economies of scale.

"Uniting our two companies presents an extraordinary opportunity to expand vacation options for guests and create revenue in strategic growth areas," said Richard Fain, chairman and chief executive of Royal Caribbean (RCL).

"Silversea is a crown jewel, and the acknowledged leader in luxury and expedition cruising, two key markets that are poised for growth," he said.

An industry expert Jacqueline Unsworth, cruise marketing manager for Helloworld, said the deal was not entirely a bolt out of the blue given industry trends.

All major cruise lines have been developing a strategy of having every market covered in their stable of operations," she said.

"I believe RCL will keep the integrity of the Silversea brand intact as they will be highly conscious of maintaining their clientele and all the elements that draw clients to Silversea," she said. "Silversea clients are very loyal and RCL won't wish to disrupt this."

Unsworth did not expect fares to change although there could be some tweaks in product offerings as the companies invested more in the client experiences onboard and ashore.

Founded in 1994 by the Italian Lefebvre family, Silversea has nine ships, the largest of which is about 40,000 tonnes. Royal Caribbean's just-launched Symphony of the Seas is more than five times that size.