NEW YORK -- In a surprise move, Singapore-based Star Cruises
launched a $1.9 billion takeover bid for NCL Holding by increasing
its stake in the Oslo-based operator to 50.2% late on Dec. 16.
The Asian operator thwarted Carnival Corp.'s $1.7 billion
takeover bid on Dec. 15 by acquiring 39% of NCL. This led Carnival
to say it would allow its bid to expire on Dec. 22 without
increasing its 30 kroner ($3.72) per share offer. At the time, Star
said it had no plans to bid for NCL and instead sought an
alliance.
Under Norwegian law, Star was required to launch a takeover bid
after its stake in NCL exceeded 40%. Star bid 35 kroner ($4.38) per
share for NCL and would assume debt of $750 million. Star will sell
$300 million in shares to help finance the acquisition, said
company officials.
"This is a significant milestone for Star Cruises as it will
have geographic coverage in the Americas, Europe and the
Asia-Pacific region," said Dato L. T. Lim, Star's chairman.
"The [combined] 18-ship fleet will give us enormous flexibility
in terms of deployment, marketing, purchasing and other
efficiencies that would be generated throughout the fleet for both
companies in the medium and long term," Lim said.
Star officials changed their thinking on acquiring NCL after --
or even as -- NCL submitted a plan for the proposed alliance.
"Star did not feel [the proposals] were acceptable or provided a
basis on which future discussions on intended cooperation were
likely to succeed," said company officials in a statement to Oslo's
stock exchange.
"As a result, Star decided to reconsider its intended level of
NCL shareholding."
Kristian Siem, NCL's chairman, called Star's offer "a surprise
to everybody. Star said [Dec. 15] that it wouldn't go over
40%."
Siem advised NCL's Norwegian shareholders not to "sell their
shares until the board has said anything" as it "will take a few
days for Star to draft its proposal" and "the board will use that
time to assess the process."
But one leading NCL shareholder, Trygve Hegnar, said he would
sell his shares and expressed resentment at how Star handled the
takeover bid. Hegnar questioned the timing of Star's offer.
"While Siem and [I] sat in a meeting with the head of Star
Cruises [Thursday] and Star pledged it would not buy more than 39%
of NCL, the decision had already been taken," he said in a
statement from his company's Internet news service.
"The statement [Dec. 15] that Star did not want to buy the
company was a clear diversion tactic to get the price down."
But Colin Au Fook Yew, Star's president, said NCL's board would
ultimately accept Star's bid. "Personally, I think the management
will welcome it," he said. NCL will "create a revenue line" for
Star and allow the Asian operator to move into new areas of
operation in Europe and North America, Au Fook Yew said. He added,
"We might become the first global cruise line."
Even Siem sought to cast a positive light on Star's take-over
move. "We've worked hard to create the best alternative for our
shareholders, and what we have now is an offer that's about 15%
better than the Carnival offer," he said.
Star now has more than twice the shares held by NCL's board,
which controls 27% of the company.
"Shareholders have voted with their actions by selling at a
price of 35 kroner or lower," said Siem. "The question remains if
[shareholders] acted under the right information and if all rules
and regulations were followed."
Star's 35 kroner per share bid "is justified by Star taking
extra ships, which will give it a stronger foothold in Europe,"
according to Choong Wai Kee, an analyst with J. M. Sassoons in
Kuala Lumpur, Malaysia.
But although NCL deploys some of its ships in Europe, the
majority of its passengers are North Americans, and the company's
biggest area of operations is the Caribbean.
It remains unclear exactly how Star will operate NCL. In a
company statement, Star officials seemed willing to work with NCL's
current management. "The acquisition of NCL with its Scandinavian
and U.S. culture will complement and strengthen management teams of
both companies," Lim said.
"Officers, crew, management and staff of NCL will benefit from
the financial strength and focused management approach of Star
Cruises."