TUI strengthens cruises joint venture via $767 million unit sale

FILE PHOTO: The TUI logo is displayed on a computer screen in London, Britain, October 17, 2017. Picture taken on October 17, 2017. REUTERS/Hannah McKay/File Photo

FRANKFURT (Reuters) - Holiday company TUI TUIGn.DETUIT.L on Friday said it would receive 700 million euros ($767 million) from the sale of its Hapag-Lloyd Cruises unit to its joint venture with Royal Caribbean Cruises RCL.N.

The deal with TUI Cruises, a 50-50 venture, values the unit at 1.2 billion euros and is expected to be completed in summer 2020.

About 300 million euros in additional value will be come from synergies, TUI CEO Fritz Joussen told journalists during a call, adding Hapag-Lloyd Cruises will gain access to the joint venture’s international footprint and debt facilities.

“TUI and Royal Caribbean Cruises have developed the joint venture company on the basis of a strong partnership over the past 10 years,” Joussen said.

“The expansion decision is the next big step of growth for us – from a strategic and a commercial perspective,” he said, adding that the proceeds would also help deleverage TUI’s balance sheet.

TUI shares were up 1.1-1.5% in London and Frankfurt, while Frankfurt-listed shares in Royal Caribbean Cruises RCL.F were down 1.6%.

Hapag-Lloyd Cruises has a fleet of five ships and had core earnings of 43 million euros on sales of 305 million for the fiscal year to Sept. 30, 2019.

TUI Cruises was advised by Lazard LAZ.N on the deal.

Reporting by Christoph Steitz; editing by Riham Alkousaa and Jason Neely