Royal Caribbean Cruises Ltd. (RCCL) last week said it would take a 67% stake in privately held luxury line Silversea Cruises. Silversea was founded in 1994 by the Lefebvre family of Monaco and is controlled by chairman Manfredi Lefebvre d'Ovidio; it operates nine ships: five luxury cruise ships and four in the expedition-cruising segment. Travel Weekly cruise editor Tom Stieghorst last week interviewed RCCL chairman and CEO Richard Fain and Lefebvre jointly about the deal and its implications for both RCCL and for Silversea. Here are questions from the interview directed to or answered by Lefebvre.
Q: There had been rumors over the years that Silversea was for sale at the right price. What made this the right time to sell?
Manfredi Lefebvre d'Ovidio
A: Silversea was never for sale. It was looking for ways to strengthen its balance sheet in order to further expand beyond what it was doing independently. The only party with which it looked at a more in-depth partnership was Royal Caribbean. It was the only one that is a suitable partner for Silversea.
Q: Were you approached by other parties?
A: To say that Silversea had a lot of people knocking at the door is to put it mildly. There's been a lot, a lot, a lot of people approaching us. But we've only looked at possible minority investors. But finally, when the conversation started with Royal, we understood that the partnership route with Royal was the way to achieve the enhancement of the brand.
Q: Royal Caribbean Cruises Ltd. is acquiring a 67% equity interest in Silversea. Why not just buy it outright?
A: It wasn't for sale outright.
Q: What makes RCCL different than other suitors?
A: It is the only company that has been proven to capably and satisfactorily manage a partnership, like it has done with TUI Cruises.
When you look at it from the outside, you say: these people know how to manage and work together with other people.
Q: How long ago did serious negotiations start?
A: Fifteen years ago. No, look, Silversea was conducting a process about finding a minority investor. I informed Richard about this, and that was the first time we talked about this. And then after some time we also contemplated another alternative, which was a partnership.
Q: How long ago was that?
A: You know, the time shortens. I can't remember exactly. Until three or four months ago, I was fully running a minority investor process.
Q: Is it fair to say that the deal came together only when you started talking about selling a majority stake?
A: Sure. By talking with Royal, I gradually understood that the growth potential for the partnership with Royal was really the goal. The investment [itself] that is going to made now by Royal was not the goal for either one of us. he goal for me is how we're going to be capable of growing the company together, which is the real opportunity. I would never have sold a stake to a financial investor, because he would not have brought me the growth potential for the company. [Growth increases] the value of the company from a financial point of view, but [more] especially for the success of the brand that I love and I care for. So really, this kind of investment could not have been made if not with Royal being Royal, which is a major brand that is capable of running a partnership.