KUALA LUMPUR: Genting Hong Kong Ltd (GHK), an associate of Genting Malaysia Bhd, said yesterday it had entered into an agreement to acquire leading luxury cruise line Crystal Cruises Inc from Nippon Yusen Kabushiki Kaisha of Japan for US$550 million (RM1.99 billion) in cash.
GHK (fundamental: 2.4; valuation: 3.0), listed in Hong Kong and Singapore, is a 17.8% associate of Genting Malaysia (fundamental: 2.4; valuation: 0.6), which is in turn a 49.3% subsidiary of Genting Bhd (fundamental: 2.1; valuation: 0.6).
The acquisition will be the second cruise brand under GHK, after its wholly-owned Star Cruises Ltd.
“The board continuously explores different investment opportunities and is of the view that investment in Crystal Cruises through the acquisition presents an excellent opportunity for the group to expand its cruise business worldwide,” said GHK in a filing with the Singapore Exchange.
The company said the acquisition will be funded via a combination of internally generated funds and borrowings.
According to GHK’s financial statements, the company had cash of US$921.7 million as at June 30, 2014. Meanwhile, it had some US$362.5 million in loans and borrowings.
Tan Sri Lim Kok Thay, chairman, chief executive and acting president of GHK, said in a statement that post-acquisition, the existing management team and crew of Crystal Cruises will be retained.
He said the group aims to add another ship to Crystal Cruises’ fleet.
“Genting will provide financial resources and proven expertise in innovative ship design to build a new ship that will set the highest standard in luxury cruise ships that together with Crystal’s six-star legendary service will reinforce Crystal’s reputation as the world’s leading luxury cruise line for decades to come,” said Lim.
Crystal Cruises has two award-winning vessels, Crystal Symphony and Crystal Serenity, which are valued at US$120 million and US$180 million, respectively.
“Crystal Cruises’ two ships have approximately 1,992 lower berths and the consideration has been determined on a cash-free and debt-free basis, translating into enterprise value per lower berth of approximately US$276,000,” GHK said in the statement.
The cruise line has garnered many awards, and has been rated the “World’s Best Cruise Ship” for 21 out of 22 years by Conde Nast Traveller since 1992.
For the year ended March 31, 2014, Crystal Cruises reported a net profit of US$8.9 million, compared with a net loss of US$45 million a year earlier. Its revenue for the year rose 17% to US$322.2 million from US$276.2 million.
Genting closed eight sen or 0.9% higher at RM8.94 yesterday. Its market capitalisation stood at RM32.9 billion.
Meanwhile, Genting Malaysia rose 10 sen or 2.5% to RM4.17, bringing its market capitalisation to RM23.1 billion.
According to its website, GHK, headquartered in Hong Kong, was established in 1993 and operates its fleet under Star Cruises.
Star Cruises, together with its associate company Norwegian Cruise Line and two newly joined members, Oceania Cruises and Regent Seven Seas Cruises, is the third-largest cruise operator in the world, with a combined fleet of 28 ships coveing over 450 destinations, offering approximately 47,400 lower berths.
GHK has its primary and secondary listings in Hong Kong and Singapore, respectively.
Its counter closed at 35.5 US cents on Monday, for a market capitalisation of US$2.853 billion.
It had requested for a trading halt yesterday.
The Edge Research’s fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations. Go to www.theedgemarkets.com for more details on a company’s financial dashboard.
This article first appeared in The Edge Financial Daily, on March 4, 2015.