Page 22: of Maritime Reporter Magazine (July 1997)

Proposed Celebrity Merger Attracts Rival Bid

Royal Caribbean offer for Celebrity sparks rival bid from Carnival

Princess Cruises reportedly mulling its options

On June 17, Royal Caribbean

International (RCI) and Overseas

Shipholding Group/Chandris

Group interest Celebrity Cruise

Lines Inc. announced an agree- ment to merge the two companies.

The value of the transaction is $1.3 billion, and the combination of the two cruise lines would result in an fleet of 20 ships, including five on order. "Together, the two brands will enable us to deploy vessels and attract customers on an increas- ingly global basis, as well as pro- vide opportunities to achieve

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Circle 325 on Reader Service Card greater economies of scale," said

Royal Caribbean CEO Richard

Fain. RCI would reportedly main- tain the Celebrity brand, in order to allow each entity to maximize its respective strengths.

The total transaction calls for a purchase price for the equity of approximately $500 million and the assumption of approximately $800 million in debt. The pur- chase price will be paid by a com- bination of $230 million in cash and the issuance of 7.4 million shares of RCI common stock. The transaction is subject to due dili- gence, board approvals and the execution of definitive agreements.

The merger plot thickened six days later, when RCI rival

Carnival made a $525 million bid for Celebrity. Carnival offered the funds in cash or in cash and stock.

Speculations regarding Princess

Cruises' interest in acquiring

Celebrity hit the news wires a few days later. At press time,

Celebrity had reportedly not replied to rival bids of any kind.

On June 19, Standard & Poor's affirmed Overseas Shipholding

Group's triple-'B'-minus corporate credit rating and senior unsecured debt rating. The company said that with approximately $1.2 bil- lion of debt, proceeds from the

Celebrity sale would improve cred- it measures only modestly.

Carnival Completes Joint

Tender Offer For Costa

Cruises

Together with Airtours pic,

Carnival Corp. completed the joint tender offer for Costa Crociere

S.p.A. on June 10. With the shares owned by II Ponte, a holding com- pany which Carnival and Airtours will purchase from the Costa fami- ly, Carnival and Airtours will own 98.2 percent of the ordinary share capital, 93.1 percent of the savings shares, 46.8 percent of the savings shares warrants and 82 percent of the total issued share capital of

Costa Crociere on a fully diluted basis. The total cost of the securi- ties acquired in the tender offer by

Carnival and Airtours is approxi- mately $275 million. 22 Maritime Reporter/Engineering News