First Choice Holidays to acquire RCCL's Island Cruises stake

Royal Caribbean Cruises Ltd. has agreed to sell its 50% interest in Island Cruises to First Choice Holidays, a subsidiary of U.K.-based tour operator TUI Travel PLC.

First Choice now owns 100% of Island Cruises, a cruise line that focuses on the U.K. and Brazilian markets and offers Mediterranean, transatlantic and Caribbean itineraries.

As part of the transaction, RCCL and TUI agreed to an early termination of the charter of Island Star, the former Celebrity Horizon. RCCL owns the Island Star and had chartered it to Island Cruises.

RCCL plans to redeploy the Island Star in April to Pullmantur Cruises, its Spanish brand. Island Cruises operates a second ship, the Island Escape, Royal Caribbean's former Viking Serenade.

In a statement, RCCL said it was focusing on its core brands. "We believe by focusing on developing and expanding the Royal Caribbean International and Celebrity Cruises brands in the U.K., we will be better able to serve our customers and create value for our shareholders," said Richard Fain, RCCL's chairman and CEO.

"This belief has been strengthened by the success of the inaugural season of Independence of the Seas, which has served the U.K. market from Southampton since it entered service in May."

The transaction is subject to regulatory approval in Ireland. RCCL said it would recognize a small gain on the sale of its interest in Island Cruises and the early termination of the Island Star charter.

The Island Cruises deal is separate from TUI Cruises, a joint venture formed between RCCL and TUI that focuses on the German cruise market. That partnership gives RCCL a 50% stake in the Hamburg-based TUI Cruises and uses the Galaxy, another former Celebrity vessel.

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