Royal Caribbean Group has entered into a definitive agreement to sell its Azamara brand to Sycamore Partners, a private equity firm specialising in consumer, retail and distribution investments.
Sycamore will pay $201 mill cash, subject to certain adjustments and closing conditions, which should be completed during the first quarter of this year.
The equity concern will acquire the entire Azamara brand, including its three-ship fleet and associated intellectual property.
Royal Caribbean said that this transaction will allow it to focus on expanding its Royal Caribbean International, Celebrity Cruises and Silversea brands.
“Our strategy has evolved into placing more of our resources behind three global brands, Royal Caribbean International, Celebrity Cruises and Silversea, and working to grow them as we emerge from this unprecedented period,” explained Richard Fain, Group Chairman and CEO. “Even so, Azamara remains a strong brand with its own tremendous potential for growth, and Sycamore’s track record demonstrates that they will be good stewards of what the Azamara team has built over the past 13 years.”
“We are pleased that Royal Caribbean Group has entrusted Sycamore to support Azamara in its next phase of growth,” said Stefan Kaluzny, Sycamore Partners Managing Director. “We are excited to partner with the Azamara team and build on their many years of success serving the brand’s loyal customers. We believe Azamara will remain a top choice for discerning travellers as the cruising industry recovers over time.”
Azamara’s value proposition and operations will remain consistent under the new arrangement, and Royal Caribbean said it will work in close collaboration on a seamless transition for the brand’s employees, customers and other stakeholders.
In conjunction with the transaction, Azamara COO, Carol Cabezas has been appointed President.
This transaction will also result in a one-time, non-cash impairment charge of around $170 mill. However, the sale is not expected to have a material impact on the Group’s future financial results.
Perella Weinberg Partners served as financial advisor to Royal Caribbean Group and Freshfields Bruckhaus Deringer provided legal counsel. Kirkland & Ellis provided legal advice to Sycamore Partners.
Cabezas explained the sale will increase the value of the cruise line’s product and driving the brand forward.
“Sycamore Partners, which has invested in many upscale consumer brands, is known for identifying great brands that need flexible funding to grow and succeed,” Cabezas said in a video address published on Azamara’s official website.
“Sycamore’s strategy is to partner with existing management to nurture companies for growth and invest in upscale companies. The priority is to increase the value of our product. So, it’s a win-win-win,” she added.
Azamara will adopt the same health and safety protocols as the Royal Caribbean Group, Cabezas said in a statement. These were developed by a group of public health experts at the ‘Healthy Sail Panel’.
Later it was announced that Sycamore had purchased a fourth ‘R’ class ship, Princess Cruises’ ‘Pacific Princess’, which will be renamed.
The sale of the cruise ship is in line with parent company Carnival Corp’s plan to accelerate the removal of less efficient ships from its fleet, Princess said.
‘Pacific Princess’ joined Princess in 2002, and originally entered service in 1999 as ‘R3’ for Renaissance Cruises.
Azamara will thus become a stand-alone four-ship upmarket cruising brand, and the eight ‘R’ class ships will now be divided evenly between two owners, Azamara and Oceania Cruises, said Kevin Griffin of The Cruise People.