Royal Caribbean to Buy Celebrity Cruise Line

Royal Caribbean said it is buying money-losing Celebrity cruise lines in a $1.3-billion deal that will give Royal Caribbean five relatively new ships and an opportunity to expand. The combined company, which will keep the two brand names, ranks second in the industry behind Miami’s Carnival Corp. and ahead of London-based P&O; Cruises, parent of Century City-based Princess Cruises. Analysts said that with a broader selection of cruises, Royal Caribbean will have increased clout with travel agents and an opportunity to attract more passengers from outside North America. Royal Caribbean is paying Celebrity $230 million in cash and $270 million in stock and assuming $800 million worth of Celebrity debt. Royal Caribbean Chairman Richard Fain said he hopes to close the deal in July. He also said the takeover will hurt profit through next year. Both Royal Caribbean and Celebrity attract middle-market passengers, with Celebrity appealing to more upscale, older customers with a strong draw from New England. Celebrity has strong summer markets in Bermuda and Alaska but has weaker off-season bookings than Royal Caribbean, and they compete in the dominant Caribbean market. The merger is likely to eliminate some duplication of voyages, allowing for expansion in Europe. Royal Caribbean’s stock rose $2.25 to close at $39.125. Overseas Shipholding Group, the public half of privately held Celebrity with Greece’s Chandris Group, added $1.375 to close at $20.125. Both trade on the NYSE.