Norwegian Cruise Line Holdings Ltd said it would buy Prestige Cruises International Inc from its owner Apollo Global Management LLC in a $3 billion deal to expand its high-end luxury cruise offerings.
Shares of Norwegian Cruise, the world's third-largest cruise operator, were up 13 percent at $37.57 in early trading.
Prestige, which in January registered with U.S. regulators for an initial public offering, owns upper-premium cruise operator Oceania Cruises and luxury cruise operator Regent Seven Seas Cruises. The company operates eight ships, with about 6,500 berths.
Miami-based Norwegian Cruise operates 13 cruise ships in routes spanning North America, the Mediterranean, the Baltic, Central America and the Caribbean. The company, which operates cruise liners such as Norwegian Sky and Norwegian Spirit, had revenue of $2.57 billion in 2013, up 13 percent from 2012.
The $29 billion cruise industry is expected to benefit in the coming years from the rise of the middle class in emerging economies such as China and India. Companies are racing to position themselves as the cruise operators of choice for these new customers.
Apollo had a 20 percent stake in Norwegian Cruise as of June 30, according to a regulatory filing.
Prestige was created by Apollo Global in 2007 to hold its luxury cruise investments.
Reuters reported on Sunday that the two companies were in advanced talks for a merger.
The cash-and-stock deal includes the assumption of Prestige's debt.
Norwegian Cruise said it would finance the deal with existing cash, debt and through a stock offering of about 20.3 million shares.
Barclays, J.P. Morgan Securities LLC and Deutsche Bank are providing committed financing to Norwegian Cruise for the deal.
The deal will immediately add to earnings, and result in $25 million in initial savings, Norwegian Cruise said on Tuesday.
The company said it would also pay up to $50 million to Prestige shareholders upon achievement of certain 2015 performance metrics.
Genting Hong Kong Ltd and TPG Capital, two of the top shareholders of Norwegian Cruise, have agreed to the deal, Norwegian Cruise said.
Norwegian Cruise is being advised by Barclays, while Weil, Gotshal & Manges LLP is its legal adviser.
UBS Investment Bank is advising Prestige Cruises and Paul, Weiss, Rifkind, Wharton & Garrison LLP is its legal adviser.