2016 Annual Report for Norwegian Cruiseline Holdings - F-13
The Acquisition of Prestige
On September 2, 2014, NCLH entered into an agreement with funds affiliated with Apollo and other owners to acquire 100% of the equity of
Prestige. On November 19, 2014, we completed the Acquisition of Prestige.
The Acquisition of Prestige and the principal factors that contributed to the recognition of goodwill are enhancements of our financial profile
which created a company with increased economies of scale, greater operating leverage and synergies. These synergies include revenue
enhancements and opportunities for savings in various areas. The Acquisition of Prestige also created a company with greater cash flow
generation, accelerating the ability to delever our balance sheet.
Consideration for the Acquisition of Prestige consisted of $1.1 billion in cash and non-cash considerations of 19,969,889 NCLH ordinary shares
valued at $834.1 million based on the closing market price of NCLH's shares as of November 18, 2014 and contingent consideration valued at
$43.4 million. In addition, we assumed debt of $1.6 billion from Prestige. The contingent consideration arrangement subjected NCLH to an
additional cash payment of up to $50 million upon achievement of certain 2015 revenue milestones. The contingent consideration was valued
using various projected 2015 revenue scenarios weighted by the likelihood of each scenario occurring. The probability weighted payout was then
discounted at an appropriate discount rate commensurate for the risk of meeting the probabilistic cash flows. For more on the contingent
consideration valuation, we refer you to "Valuation of Contingent Consideration" below.
Prestige is reported in our results of operations from the acquisition date which includes approximately $111.7 million of revenue and
approximately $19.7 million of operating loss related to Prestige for the period ended December 31, 2014.
The excess of the cost of acquisition over the net of amounts assigned to the fair value of the assets acquired and the liabilities assumed is
recorded as goodwill, which is not expected to be deductible for tax purposes.
Based on this fair valuation, the purchase price was allocated as follows (in thousands):
Prepaid expenses and other assets
Amortizable intangible assets
Property and equipment
Goodwill and tradenames
Other long-term assets
Current portion of long-term debt
Accrued expenses and other liabilities
Advance ticket sales
Other long-term liabilities
Total consideration allocated, net of $295.8 million of cash acquired
Goodwill and intangible assets acquired included the following (in thousands):
Tradenames (indefinite lived)
Backlog (1 year amortization period)
Customer relationships (6 year amortization period)
Pro forma Financial Information (unaudited)
The following unaudited pro forma financial information presents the combined results of operations of NCLH and Prestige as if the Acquisition
of Prestige had occurred on January 1, 2013. The pro forma results presented below for 2014 combine the historical results of NCLH and Prestige
for 2014. The unaudited pro forma financial information is not intended to represent or be indicative of our consolidated results of operations or
financial condition that would have been reported had the Acquisition of Prestige been completed as of January 1, 2013 and should not be taken
as indicative of our future consolidated results of operations or financial condition.