TUI AG (LON:TUI) is spinning off its wholly owned Hapag-Lloyd cruises business into a joint venture with Royal Caribbean Cruises Ltd (NYSE:RCL) valued at around €1.2bn.
TUI will receive net cash of €700mln, of which €63mln depends on the 50-50 venture hitting underlying profits targets this year, and said it expected the deal to also result in a “considerable” gain in the book value of the new TUI Cruises business.
The Anglo-German company and Royal Caribbean said the partnership, combining the “shipbuilding, operational and digital expertise of Royal Caribbean and the strong brand and distribution power of TUI”, would also be further expanded into the luxury and expedition cruise segment.
TUI said the deal was part of its previously stated aim of delivering additional profitable growth at a lower level of capital intensity.
Hapag-Lloyd, which is mostly focused on German-speaking markets, owns two luxury ships and three expedition cruise ships. In light of the transaction, it is anticipated the luxury and expedition fleet will grow in the coming years, as it is expected that demand for luxury and expedition cruises will continue to grow.