The Bond That Buys

[jetsfan58]

In todays society, competition still enables vast consumer choices. When it comes to the Cruise Industry there are two giants; Carnival and Royal Caribbean. In business the number one organizations are always having to keep an open eye on the number two player. Sometimes the number one organization has to spend additional marketing and advertising mega dollars to remain on top. 

 

With Carnival ruling the category and always looking behind at a close second Royal; would there ever be a need for Carnival to buy them? The old sales philosophy is "If you are concerned about remaining number one, then purchase number two."

 

Could it ever happen? Never say Never!. Car-Royal Cruises "Not a Bad Sound" Thoughts????????

 

 

[ninjacat123]

Keep your friends close and your enemies closer.  It could happen....

[Old Fart Cruisers]

Carnival can't even afford to buy enough bacon to serve every day🥓.  How could they afford to buy Royal Caribbean, who has never run out of it.🥴 

[jetsfan58]

Not about buying bacon it's about a mega merger that could eventually happen? Then Royals prices  (which is how they continue to stock the bacon) will inevitably go down.  

[BlerkOne]

Anti-trust

[cruisingguy007]

Carnival Royal Corp sounds much better than Car-Royal or any mixed namesake. If it did happen, it would probably be better to leave it as a subsidiary than to fold it into a combined product, much like Princess or any of the other "Carnival by another name" cruise lines. More flexibility with intracompetition.  

[jetsfan58]

Anti-Trust is always a major player in any merger and/or acquisition talks. That won't stop the process if it ever happens. The biggest risk is violating the Clayton Act Section 7. Depends on the level of communication for all parties,  

[coaster]

Carnival got into a bidding war around 2000 to buy NCL. They lost to Star Cruises. I look for a big player to buy NCL to avoid anti-trust issues. 

Edited August 7, 2022 by coaster

[tidecat]

If cruise lines still have relatively weak balance sheets later this decade, I could see some non-cruise tourism/travel companies looking to make acquisitions.

 

Universal, via parent company Comcast, seems like a natural. The IPs from the theme park and film side would yield plenty of opportunities for branding onboard a ship).

 

Any airline or hotel operator would also have a lot to leverage, especially if they could combine the loyalty program across multiple products (i.e., redeem airline miles for a cruise, or earn free flights for a certain number of nights onboard).

 

I would also expect MSC to be a possible player for any cruise related acquisitions. CCL, RCL, and NCLH would give them a more American-focused brand to go with the more European-focused MSC Cruises. I also imagine there would be synergies with the cargo side of MSC that could be leveraged.

 

I would expect Virgin Voyages to be acquired first before any of Carnival, Royal, or Norwegian. It's a small enough lime that would be a feasible investment. The ships would need some extensive work to be rebranded, but it probably beats building 3-4 ships from scratch.

[BlerkOne]

Ted Arison was a co-founder of NCL. He left at a good time and never looked back.

[BlerkOne]

If Carnival and Royal came together, it would be a good way to alienate the customer base of both.

[coaster]

18 minutes ago, BlerkOne said:

Ted Arison was a co-founder of NCL. He left at a good time and never looked back.

NCL offered alot of ships with subdued interiors in the 90's. Those of us that did not appreciate the Joe Farcus interiors of Carnival. Never went on Royal in the 90's as they were so much more expensive than NCL. Now, NCL seems to be more expensive than Carnival and Royal. MSC could be a another takeover target, but they are privately owned. Not sure if that makes it more complicated or not. NCL struggled financially in the early to mid 90's,  but was profitable later in the 90's when Carnival tried to buy them.

Edited August 7, 2022 by coaster

[coaster]

Virgin is sailing close to 50 percent capacity now while other lines are 100 percent and above. They bet big on being different and the gamble is not playing out. 

 

l look for some of their ships being sold at fire sale prices soon to other lines. Private equity has the most stake in Virgin.  Ever heard of Bain Capital? Sir Richard Branson just gets a royalty for the Virgin branding.  His money is safe if it fails. He is probably one of the best business people on earth due his likability to the general public, but he is smart.  He is not tying up his own money in Virgin which seems to be failing short profit wise.

Edited August 7, 2022 by coaster

[staceyglow]

If CCL bought RCCL, they would have a near monopoly on value-priced cruises.

 

And without competition,  they wouldn't be value-priced for much longer.

[firefly333]

It's only been a month or two since analysts posted that it's possible carnival could go bankrupt and to $0. Carnival responded that their prices have firmed up. Now they issued yet another secondary further diluting the outstanding shares so now about double the amount of shares are floating. 

 

I guess this thread is meant to be humor. Carnival is struggling to make a profit. I doubt they will commission any more new ships other than those already on order. They have sold the leasr profitable. I would first ask when do you expect carnival to be profitable, rather than when some other cruiseline will be bought... much less the 2nd biggest line. 

 

Agree with blerk, for some reason carnival pax hate rcl and rcl hate carnival. Rcl is in better financial shape than carnival at this time. Per analysts. Look at all the new cutbacks announced. This isnt the sign of strong financials. They carnet buying anything right now they dont already have money committed to buying. Ecstasy retiring a little early announced. Couldn't hang onto her. They are walking a very thin line right now. If pre testing and vaccination is lifted imo it will really help carnival.

 

I guess I should have just posted something goofy and followed along. Sorry .. and I am a stock holder.  Motley Fool

 

Management has forecast net losses for the remainder of its fiscal 2022 and a return to historical occupancy levels in fiscal 2023. The cash infusion it got from selling those new shares could help the company stay afloat until then.

[BlerkOne]

And Royal recently had to take on another 900 million or so in debt. Royal has a much higher debt to equity ratio. Neither one rates higher than junk status at the moment. But then, they have some good company 

[tidecat]

I think both Carnival and Royal have a tough four to six years ahead of them. I expect the dilution/convertible debt offerings to be roughly an annual event for the next few years. This will especially be true if interest rates remain high.

[jetsfan58]

Thanks for the great commentary. We have all seen the mergers, acquisitions and parachutes (Chrysler, etc.). I just wanted to gauge the responses and your candid perspectives of something that could potentially happen to this Industry. As the industry progresses there will be certain lessening of the corporate offerings. The smaller entities just will not survive without a big brother/sister organization backing them.

 

Firefly I did indeed want to add a bit of fun to this forum.  

[mz-s]

12 hours ago, BlerkOne said:

If Carnival and Royal came together, it would be a good way to alienate the customer base of both.

 

Indeed, Royal's main brand identity seems to be "Not Carnival"

[jetsfan58]

9 minutes ago, mz-s said:

 

Indeed, Royal's main brand identity seems to be "Not Carnival"

That could be mainly due to the ongoing price disparity between the two giants. We cruised only one Royal adventure in our journeys. Again the line just did not appeal to us so we became Carnival Cruisers. Not only did we save valuable dollars we really enjoyed ourselves.

 

Don't know if a buyout/merger would help the "Not Carnival feelings" aspect but I do truly believe that it would help all of our wallets!

[mz-s]

13 minutes ago, jetsfan58 said:

That could be mainly due to the ongoing price disparity between the two giants. We cruised only one Royal adventure in our journeys. Again the line just did not appeal to us so we became Carnival Cruisers. Not only did we save valuable dollars we really enjoyed ourselves.

 

Don't know if a buyout/merger would help the "Not Carnival feelings" aspect but I do truly believe that it would help all of our wallets!

 

As of right now I see it more likely that Carnival or Royal would want to shed brands, not take on more. But as the decade wears on anything can happen.

[jetsfan58]

42 minutes ago, mz-s said:

 

As of right now I see it more likely that Carnival or Royal would want to shed brands, not take on more. But as the decade wears on anything can happen.

Great point and truly time will tell.  

[BlerkOne]

3 hours ago, mz-s said:

 

Indeed, Royal's main brand identity seems to be "Not Carnival"

and I thought it was Shopping Mall of the Seas... 🤣

[crewsweeper]

I can see smaller subsidiary lines being sold  to other cruise lines who are looking to expand markets, Asia and South Pacific or Africa.  I can't see major lines with mega ships being bought by other mega lines with mega ships that compete same major markets, Caribbean, Med, Baltics.

[CruizinSusan70]

Carnival Corp is made up of 9 lines and had revenue of 20.82 Billion in 2019.   RCCL is made up of 3 lines and had revenue of 10.95 Billion in 2019.  Would love to know the breakdown of just CCL and RCI, not with all of the other lines in each corporation added in.

 

If there were any acquisitions to possibly be made in the future it would be MSC obtaining NCL to expand their North American footprint, but at this point both of them have more ships in the pipeline than Carnival or Royal.   MSC and NCL each have 6, Royal has 4 and Carnival has 2.