Royal Caribbean Falls 5% on $3B Sandals Resorts Stake Deal

24/7 Wall St.··US·Read original
3▲0 ▼3Impact / 5
Summary · why it matters

Royal Caribbean Group confirmed overnight it will acquire a 50% equity interest in Sandals and Beaches Resorts for approximately $3 billion, sending its shares down 5% to $224.03 in Wednesday morning trading. The company said the price represents a forward EBITDA multiple of approximately 10x, and it has secured committed debt financing from Morgan Stanley to fund the deal, which is expected to close early next year and be accretive to earnings. Chairman and chief executive Jason Liberty called the partnership an important next step in building a vacation platform, while Sandals executive chairman Adam Stewart said the deal enables faster growth; the joint venture will be governed by a shared board under their leadership. Carnival fell 3% to $21.69 and Norwegian Cruise Line Holdings dropped 3% to $13.77, though Royal Caribbean is the only one of the three absorbing an acquisition, and the sector has been under pressure well before the headline, with Royal Caribbean down 17% year to date, Carnival down 28% and Norwegian down 38%. The bear case centers on a debt-funded pivot into land-based resorts, a different operating model from ships, with accretion still quarters away.

Impact on assets 4

Consumer Discretionary▼ · 3 stocks
Royal Caribbean Cruises Ltd
RCL
▼ NegativeCapitalrelevance

Royal Caribbean will acquire a 50% stake in Sandals and Beaches for ~$3B via debt financing, a debt-funded pivot into land-based resorts that sent shares down 5%.

Carnival Corporation
CCL
▼ NegativeCompetitionrelevance

Carnival fell 3% as the sector sold off alongside Royal Caribbean's acquisition news, though it is not a party to the deal.

Norwegian Cruise Line Holdings Ltd
NCLH
▼ NegativeCompetitionrelevance

Norwegian dropped 3% amid sector-wide pressure tied to Royal Caribbean's debt-funded pivot, but is not involved in the deal.

Financials▲ · 1 stocks

Off-coverage companies 1

Sandals Resorts InternationalPrivate± Mixed
Capitalrelevance

Sandals is the acquisition target receiving a $3B investment for a 50% stake, but the article gives no clear positive or negative read on Sandals itself.

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