Royal Caribbean Group, the publicly traded parent company of the cruise lines, has entered into a definitive agreement to sell its smallest cruise line, Azamara, to a private equity firm, Sycamore Partners. The equity firm, which specializes in consumer, retail, and distribution investments, will acquire the Azamara brand, including three cruise ships and the associated intellectual property in an all-cash carve-out transaction valued at $201 million.
“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,” said Richard Fain, Chairman and Chief Executive Officer of Royal Caribbean Group. “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.”
Royal Caribbean launched the Azamara brand in 2009 after it acquired Spain’s Pullmantur Cruises. Pullmantur was operating two, 30,000 gross ton cruise ships that had originally been built in 2000 for another cruise line, Renaissance Cruises, which had ceased operations in 2001. The popular R Class of cruise ships, which accommodated 700 passengers had been dispersed to several cruise lines including the basis for starting Oceania Cruises as well as sister ships that were operated by Princess Cruises in addition to the two ships at Pullmantur. Royal Caribbean decided to replace the two smaller ships with larger cruise ships to expand the Pullmantur operation.
Initially, it was announced that the two smaller cruise ships would join Royal Caribbean’s premium cruise line Celebrity Cruises, but instead, the decision was made to launch Azamara Cruises with the two ships. Azamara struggled to establish its brand image briefly changing its name to Azamara Club Cruises before reverting to the shorter brand name. Azamara sought to define its product with a destination focus, including more unique ports and longer port stays.
After a decade of operations, Royal Caribbean acquired a third sister ship for Azamara that was introduced in 2018. However, unlike the company’s other brands, Azamara did not receive any new builds instead remaining a niche brand with a loyal clientele.
The transaction marks the second time Royal Caribbean has sold a cruise line to a private equity firm. In 2016, the company sold controlling interest in Pullmantur to another private firm but in that transaction retained a 49 percent stake in the company.
Royal Caribbean Group committed to working in close collaboration with the new owners of Azamara to complete the transition for Azamara employees, customers, and other stakeholders. In conjunction with the transaction, Azamara Chief Operating Officer Carol Cabezas has been appointed president of the brand.
The sale of Azamara is not expected to have a material impact on Royal Caribbean Group’s future financial results, but they are will record a one-time, non-cash impairment charge of approximately $170 million on the completion of the sale.
The acquisition marks Sycamore Partners first in the travel sector. The private equity firm’s investment portfolio includes well-known consumer brand names Staples, Talbots, and The Limited, in retailing, as well other consumer and retail-related investments.
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