Carnival Corp. Set to Acquire Cunard

MIAMI -- Carnival Corp. clinched a $500 million deal to buy a controlling interest in Cunard.

With a Norwegian banking group, Christiana Markets, as minority partner, the Miami-based cruise giant bought the line from Kvaerner, a construction and engineering conglomerate based in Oslo, Norway, and London.

The deal is subject to a Securities Exchange Commission (SEC) review period of up to three months, since it involves publicly traded entities.

Carnival Corp., owns Carnival Cruise Lines, Holland America Line and Windstar Cruises, both in Seattle, and has equity holdings in Miami-based Costa and Seabourn Cruise Line of San Francisco.

According to an official statement, Cunard will be merged with Seabourn. The chairman of the merged company will be Atle Brynestad, a Norwegian entrepreneur who is Carnival's equal ownership partner in Seabourn.

Not answered in the statement is the question of where the merged company is to be located and who is to run it. Larry Pimentel is the president of Seabourn and Paris Katsoufis is his counterpart at Cunard.

The statement alluded to an agreement with a Kvaerner affiliate, Kvaerner Masa-Yards, in Finland, to "develop a design for a new class of ships for Cunard." How big these ships would be, how many ultimately might be ordered and what innovations Cunard's new owners would expect to be built into the design were unclear.

"These are things that have not been decided," a source at Carnival said. "We must await the SEC review period before we can announce all of the plans."

Senior officials of the companies involved -- including Carnival chairman Micky Arison and Katsoufis -- were unavailable for comment.

An upbeat Pimentel told Travel Weekly, "It only happened 72 hours ago but it's possible that there will be some discomfort, some awkwardness to start with. But you have to remember that Carnival is a friendly suitor in this situation. I think the trade should react very positively to what's happened."

Pimentel said that much about the future shape of Cunard/Seabourn had to still be determined but he added, "Historically, Carnival has made intelligent acquisitions that have enhanced corporate muscle without major upheaval. Look at Holland America Line and Windstar." He continued, "I don't know why anybody would want to take a negative view of this; it's a positive."

Cunard currently has five ships -- the QE2, the Vistafjord, the Royal Viking Sun and Sea Goddess I and II.

Seabourn has three -- the Pride, the Spirit and the Legend.

It had been widely believed that Kvaerner would retain a minority share in Cunard, but the Carnival statement indicates that it did not.

BY FRAN GOLDEN

NEW YORK -- Agents generally reacted favorably to Carnival Corp.'s acquisition of a majority stake in Cunard, citing its track record of keeping brands in tact and investing in new ships.

However, some expressed concern about the cruise industry's ongoing consolidation.

Tony Persico, chairman of CruiseWorld and CruiseOne, both in Deerfield Beach, Fla., said he believed it would have been best for Cunard to remain independent, but with its owner, Kvaerner, so anxious to sell, he believes Carnival Corp. was the best buyer.

"I'm happy they [went] with the Carnival family. Carnival has proven the lines it acquires do maintain their identity and management style, and have the added benefit of the type of funding Carnival has been able to provide," Persico said.

He said a commitment from Carnival to maintain Cunard's brand identity is important. "I would hate to see the day when the number of choices to the consumer diminish because of this type of [consolidation] activity."

Persico, a member of Cunard's agency advisory board, said he was glad to see that Carnival planned to put Cunard in its Seabourn division because it moves Cunard "more solidly into the ultra deluxe category with its Royal Viking Sun and two Sea Goddess ships." He predicted, however, that the Vistafjord, which he said does not fit into this category, will be sold or overhauled.

"I think [the deal is] fantastic," said Elaine Ackerman, owner of Caprice Cruise Concepts and Caprice Travel in Yonkers, N.Y., and chairwoman of ASTA's cruise committee. "[Carnival Corp.] is so smart because it costs so much money to build one ship and here they have four or five ships for the price of one," she said.

Lucy Hirleman, president of Berkshire Travel of Newfoundland, N.J., said that while she is not fond of consolidation, "Carnival has maintained product differentiation, and that's very important on our end."