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Celebrity goes with Royal
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July 3, 1997: 7:34 a.m. ET
Celebrity Cruises rejects Carnival, hops on board with Royal Carribean
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NEW YORK (CNNfn) - Royal Caribbean International and Celebrity Cruise Lines Inc. said they have entered into a definitive agreement to merge the two companies in a $1.3 billion transaction.
In a statement, Celebrity, which is a 50/50 venture between closely held, Greece-based Chandris Group and Overseas Shipholding Group Inc., said both principal shareholders have signed off on the pact.
Royal Caribbean will pay $515 million, including $245 million in cash and $270 million in common stock, as well as assume $800 million of debt. The agreement is subject only to regulatory clearance.
The accepted offer is slightly lower than a competing bid from industry leader, Carnival Corp. On June 26, Carnival offered to buy Celebrity for $525 million in cash and stock.
"From any vantage point, we could not have picked a better partner," said Royal Caribbean Chairman and Chief Executive Richard D. Fain.
The two cruise lines said they will continue to operate as separate brands. Combined, they will have a fleet of 20 ships -- the youngest fleet of any major cruise operator -- with a total capacity of 38,000 berths by the year 2,000. The totals include three new Royal Caribbean and one new Celebrity ship currently on order.
Under the agreement, Celebrity Chairman John Chandris and Overseas Shipholding President Morton P. Hyman will join Royal Caribbean's board. Richard Sasso will remain as president of Celebrity.
Royal Caribbean expects some dilution in 1998 earnings per share, Fain reported. There also will be some dilution in 1997, due to combining Celebrity's fourth-quarter results with Royal Caribbean's and the fact that the fourth quarter is traditionally a weaker period for the cruise industry.
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