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Royal Caribbean/NCL Merger?


tert333
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I know that this is speculation, but with all of the recent events anything is possible.   As days pass, the number of days until the next cruise is increasing.  Covid in parts of the world is getting worse, and many people don't seem to care as it is more important with them to go out and party than show some restraint.

 

Eventually the cruiselines may run out of money.  One thing that is happening is the collaboration between NCL and Royal.  They are sharing a safety committee.  Yesterday it was announced that NCL will be licensing the Muster 2.0 software that RCL developed.

 

It would not be out of question to think that the two groups could merge.   This would allow them to save some significant operating costs, would take them to a size comparable to carnival and most importantly, buy them additional time of survival.    This is not an unusual situation in times of financial need.

 

Thoughts?

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You have here two major cruise lines with too many ships and no cash and no operations.  The merger would create an even larger major cruise line with even more excess ships and a much larger cash burden and no operations.  I cannot see any advantage to a merger.  I can however imagine that if a cruise line such as NCL goes bankrupt and is not restructured and not operating, it will have some of its prime assets picked over in a fire sale by another surviving cruise line (or investment groups).

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I will say this. If it did happen, they would merge with Royal not X. Their ships fit there not with X. They are a family line ship type line. 

 

But I doubt it will happen. One reason is that NCL's stock is currently selling at $14 per share while RCL is a little over $50. Of course there may be a lot less RCL stock out there. 

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I don’t expect a merger.  I think, instead, the Royal Caribbean Group and NCL are simply combining forces for a couple of things where they would otherwise be duplicating expenses.  Both are individually smaller than Carnival Corp, so it make total sense,  

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On 7/25/2020 at 8:45 AM, tert333 said:

I know that this is speculation, but with all of the recent events anything is possible.   As days pass, the number of days until the next cruise is increasing.  Covid in parts of the world is getting worse, and many people don't seem to care as it is more important with them to go out and party than show some restraint.

 

Eventually the cruiselines may run out of money.  One thing that is happening is the collaboration between NCL and Royal.  They are sharing a safety committee.  Yesterday it was announced that NCL will be licensing the Muster 2.0 software that RCL developed.

 

It would not be out of question to think that the two groups could merge.   This would allow them to save some significant operating costs, would take them to a size comparable to carnival and most importantly, buy them additional time of survival.    This is not an unusual situation in times of financial need.

 

Thoughts?

How that would save them "significant" operating costs.  Operating costs are things such as food, fuel, labor etc.  A merger wouldn't have much of an impact on those.

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28 minutes ago, bouhunter said:

How that would save them "significant" operating costs.  Operating costs are things such as food, fuel, labor etc.  A merger wouldn't have much of an impact on those.

 

Combining administrative staff including accounting, marketing, customer service, supplies managers etc. These functions often overlap from a merger & jobs are lost due to duplication.

 

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17 minutes ago, dabear said:

 

Combining administrative staff including accounting, marketing, customer service, supplies managers etc. These functions often overlap from a merger & jobs are lost due to duplication.

 

Good points.  As long as the cancellations/refunds continue I would hope those jobs wouldn't be the ones cut.... 🙂

 

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13 hours ago, DrKoob said:

I will say this. If it did happen, they would merge with Royal not X. Their ships fit there not with X. They are a family line ship type line. 

 

But I doubt it will happen. One reason is that NCL's stock is currently selling at $14 per share while RCL is a little over $50. Of course there may be a lot less RCL stock out there. 

 

If a Merger would happen it would be more that RCL would buy the NCL brand and likely continue to run it seperately, as done by Carnival with P&O, Aida and Costa which all would be considered "Carnival" products of different home markets.

 

Assuming that the NCL and RCL brands are operating in the same sector, it could result in having both of the brands to get rid of their oldest ships to save costs for instance.

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20 minutes ago, LXA350 said:

 

If a Merger would happen it would be more that RCL would buy the NCL brand and likely continue to run it seperately, as done by Carnival with P&O, Aida and Costa which all would be considered "Carnival" products of different home markets.

 

Assuming that the NCL and RCL brands are operating in the same sector, it could result in having both of the brands to get rid of their oldest ships to save costs for instance.

 

Totally agree with you. And I think it would be less of a merger that a buy out. 

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1 hour ago, dabear said:

 

Combining administrative staff including accounting, marketing, customer service, supplies managers etc. These functions often overlap from a merger & jobs are lost due to duplication.

 

Exactly. You need to look at the landside operations, not just ship operations.

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38 minutes ago, hcat said:

A further step down

 

Or it would help that all of the brands will continue to exist instead of one of them going bankrupt and disapearing completely. In order for the industry to survive it will require some drastic cost savings over the next years, ranging from reducing the fleets, re negociating pricing for supplies etc.

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Each brand should look out for themselves.

Imo, there’s no way RCG is going to buy out or merge with any other cruise line at this time. They’re all operating on a shoe string with borrowed funds. Not all brands will survive, that seems to be inevitable. There is speculation that Carnival may be bankrupt within 2 years.

Many long standing retail businesses are closing and not coming back, so why should all cruise brands be expected to continue to exist? Many people are afraid to cruise now, and for the foreseeable future for a number of reasons. There are just too many ships and not enough people to fill them. I would rather see Royal/X survive through restructuring/reducing their fleet, rather than play Russian roulette with another cruise line.

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I don't think a merger will happen unless there is a view from one of the companies that they may not be able to survive.   Survival will all depend on liquidity of assets and ability to meet ongoing expense requirements.  As the Covid pandemic further delays the start of cruising, the cruiselines may need to go back for more money.   So far they appear to have been able to get money relatively easily.  This will tighten up as we get further into the recession.    It will be easier to get money, if the business plan shows significant administrative cost savings through a combination/purchase.  As part of the plan, they may also have to commit to further reduction in ships as part of the plan, or even combination/elimination of lines(eg Oceania/Azamara...)

 

The next few months should tell a lot.   We will be in a better position in regards to a potential vaccine and the timing of availability.  While the news to date is positive, nothing is absolute until the phase 3 testing is completed.   All of the major cruiselines lines have the liquidity to take them into 2021.  If there are no satisfactory vaccines found by the end of the year, the cruiselines are going to have to implement more drastic measures. 

 

We are not seeing much movement from the CDC and other regulatory agencies.   It is clear they believe that cruising is not a safe method of travel in the middle of a pandemic.  Unless the pandemic is eliminated through a vaccine, I think you will see consolidation, bankruptcies in the industry.  Even in areas, such as Australia and Spain, where we thought that it was contained, hot spots are popping up.  

 

Lets all hope a vaccine is successful and available by the end of the year, so that more drastic measures by the cruiselines do not have to take place!!

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IMO far more likely to see a large travel and entertainment company, US private equity fund or foreign sovereign wealth fund step up and take a controlling interest in a cruise line.  Would require a patient investor with a long term outlook.  Saudi's already own a piece of CCL.  Disney could consider expanding their cruise business.  Warren Buffet could buy all three publicly traded cruise companies with just a fraction of his cash on hand.   

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52 minutes ago, tert333 said:

We are not seeing much movement from the CDC and other regulatory agencies. 

Understandably so, given the CDC's need to focus on the spiking number of cases and deaths. 

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34 minutes ago, Baron Barracuda said:

IMO far more likely to see a large travel and entertainment company, US private equity fund or foreign sovereign wealth fund step up and take a controlling interest in a cruise line.  Would require a patient investor with a long term outlook.  Saudi's already own a piece of CCL.  Disney could consider expanding their cruise business.  Warren Buffet could buy all three publicly traded cruise companies with just a fraction of his cash on hand.   

Warren Buffet shocked his stock holders on a conference call a couple of months ago when he revealed that he had sold all of his shares in the Airlines. I really don’t think that he's going to buy one cruise company now let alone three, Imo.

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On 7/25/2020 at 8:45 AM, tert333 said:

I know that this is speculation, but with all of the recent events anything is possible.   As days pass, the number of days until the next cruise is increasing.  Covid in parts of the world is getting worse, and many people don't seem to care as it is more important with them to go out and party than show some restraint.

 

Eventually the cruiselines may run out of money.  One thing that is happening is the collaboration between NCL and Royal.  They are sharing a safety committee.  Yesterday it was announced that NCL will be licensing the Muster 2.0 software that RCL developed.

 

It would not be out of question to think that the two groups could merge.   This would allow them to save some significant operating costs, would take them to a size comparable to carnival and most importantly, buy them additional time of survival.    This is not an unusual situation in times of financial need.

 

Thoughts?

Possible.

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8 hours ago, terrydtx said:

NCL also owns Oceania which could be merged with Azamara to increase their fleet size and destinations. I have sailed on both Royal and NC and much prefer NCL ships.

Speaking from experience, IMO, when smaller cruise lines become part of a larger ones, what made the smaller one "a cut above" manages to get chopped away little by little.  Celebrity today in no way resembles our first 1993 Celebrity experience on the Horizon (even without balconies) nor our first Oceania experience on the Marina in 2012.

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3 hours ago, C-Dragons said:

Warren Buffet shocked his stock holders on a conference call a couple of months ago when he revealed that he had sold all of his shares in the Airlines. I really don’t think that he's going to buy one cruise company now let alone three, Imo.

Don't expect he would.  Just used him as an example of a patient investor with lots of free cash.  There are many others out there with similar attributes but a greater appetite for risk.  Point is with a current enterprise value (stock market capitalization + debt outstanding) of only $23B RCL is an easy target for predators and the longer the company remains shut down the cheaper it will get.

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More likely would be MSC expanding their presence by taking over NCL. MSC as a privately owned company has the assets to make such a move a reality without as much overlap in itineraries that exist between RCCL and NCL. 

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