February 11, 2007
Carnival plans Spanish joint venture
Carnival Corporation & plc (NYSE/LSE: CCL; NYSE: CUK) and Orizonia Corporacion, Spain's largest travel company have signed letter of intent to form a joint venture to operate and expand the existing Iberojet Cruceros brand in Spain.
Orizonia's principle shareholder is the Carlyle Group. Iberojet Cruceros is a unit of Orizonia's Iberojet subsidiary. It operates two ships, the 834-passenger Grand Voyager, built in 2000, and the 1,196-passenger Grand Mistral, constructed in 1999.
The new joint venture would eventually be comprised of a multi-ship fleet serving the rapidly expanding Spanish vacation sector.
Under the proposed agreement, the two existing vessels would be transferred to the joint venture. The intention is to grow that fleet over the next several years through the acquisition of existing tonnage from Carnival Corporation & plc's current fleet.
"Iberojet operates a very successful cruise brand, along with a wide range of quality and affordable vacation products, which have garnered extremely strong brand awareness with Spanish consumers," said Micky Arison, Carnival Corporation & plc's chairman and CEO. "With their extensive experience marketing in Spain, combined with a keen understanding of Spanish vacation trends, Iberojet provides a solid partnership for expanding in one of the fastest-growing segments of the European vacation industry."
"We are very proud in partnering with Carnival, the world's leader in the cruise vacation business," said Pedro de Esteban, Orizonia's chairman and managing director of the Carlyle Group. "With Carnival's support and expertise, we intend to continue expanding our operations, adding high quality vessels and providing specialized top services to our Spanish customers."
Under the proposed transaction, the Iberojet cruise business being contributed to the joint venture company will be valued at Euros 320 million, with Euros 180 million in debt, representing a net capital value of Euros 140 million. Carnival will own 75 percent of the joint venture with Iberojet owning 25 percent.
Iberojet Cruceros would utilize the current Iberojet cruise management team with its president Alfredo Serrano reporting to the joint venture's board of directors.
It is expected that Pier Luigi Foschi, chairman and CEO of Carnival's Costa Cruises unit, will serve as chairman of the board of the joint venture. Costa already has a strong presence in the Spanish sector.
"With the combined strengths of the Costa and Iberojet organizations, the new joint venture should generate even greater brand recognition in our efforts to grow the interest in cruising in a market that we believe is primed and ready for expansion," Foschi said.
Carnival expects the transaction to be neutral to earnings on an annualized basis for the 12-month period following the transaction closing. The transaction is expected to close in the second quarter of 2007, pending approval of both companies' boards of directors, all necessary regulatory approvals, customary due diligence and execution of definitive agreements.