MIAMI -- Royal Caribbean Cruises Ltd. became the latest major
cruise company to expand its ties to the European passenger market
by forming a joint venture with First Choice Holidays, the U.K.'s
third-largest tour operator.
The joint venture will include the formation of a new
Europe-based cruise line, company officials said.
The agreement comes a week after P&O, cruising's
third-largest line, agreed to purchase Festival Cruises, one of
Europe's largest cruise operators.
First Choice serves more than 4 million customers annually
through several brands, and also operates a charter airline.
Under terms of the deal, Royal Caribbean will buy about $297
million in convertible preferred stock, representing a 20% interest
in First Choice. The agreement is subject to approvals from U.S.
and U.K. regulators and First Choice shareholders.
For Royal Caribbean, the deal creates a new source of U.K.
passengers for its Celebrity and Royal Caribbean International
"We are convinced the alliance will create significant new
demand for our brands," said Richard Fain, Royal Caribbean's
First Choice, meanwhile, will receive an infusion of cash, which
company chairman Ian Clubb said will fund opportunities in the
consolidating European tour operator business.
First Choice is itself considered ripe for acquisition by
another European tour company. Clubb said First Choice is "open" to
"We want to take part in the consolidation process," he
As part of the joint venture, Royal Caribbean's 1,500-passenger
Viking of the Seas will become the first ship in a new cruise line
targeting Europe's mass market, with Mediterranean and Caribbean
itineraries beginning in 2001. The new company will start with a
$100 million valuation, with each party contributing $50