German tourism giant TUI has completed the sale of Hapag-Lloyd Cruises in what it called a "difficult market".
But expansion plans for Hapag-Lloyd Cruises have been put on hold under its new ownership, after the coronavirus pandemic brought activity crashing to a halt.
The five-ship company was sold to TUI Cruises, a joint venture between TUI and US giant Royal Caribbean Cruises, in a deal worth €1.2bn ($1.31bn).
All approvals, including merger clearance by the European Commission, have now been received, TUI said.
"The transaction is closed in a difficult market environment on the terms and conditions agreed," the company added.
The transfer of the five Hapag-Lloyd Cruises vessels to the joint venture will be completed in the coming days.
The fleet consists of two luxury cruiseships and three expedition vessels.
Enough ships for now
A TUI spokesman told TradeWinds that at the time of the sale announcement in February it believed bringing Hapag-Lloyd Cruises into the joint venture would "enhance opportunities to grow the brand in its luxury and expedition segment."
"However, as there are currently several vessels in the pipeline, there is no immediate plan to increase the amount of vessel orders," he said.
TUI told TradeWinds back then that orders would be placed in the coming months and years.
"We are getting a new expedition ship next year, and there is lot of demand in this sector, but we also want to expand in the luxury market," the German company said in February.
The 230-berth expedition vessel is under construction at Vard in Norway, and TUI also has a 200-berth ship due from Brodosplit in Croatia this November.
No postponements
Asked if the company had delayed any existing vessel orders, the spokesman said: "We did not postpone any order. All proceeding as planned."
Royal Caribbean and TUI set up TUI Cruises in 2008. It has seven vessels and three on order.
The deal will also allow the company to focus on synergies.
Hapag-Lloyd Cruises was previously wholly owned by TUI.
The net cash payment to TUI is about €700m, including an earn-out element of €63m, payable if Hapag-Lloyd Cruises meets its earnings targets this year.
TUI told TradeWinds that debt of just over €400m is also included in the deal and TUI and Royal Caribbean are each contributing €75m to TUI Cruises as new equity.
TUI revealed in May that it was forced into taking out a €1.8bn loan to help it through the coronavirus crisis.
The company said Germany's KfW Group has provided the bridging facility after the government approved it on 27 March.
The fleet had been idled that month due to the Covid-19 outbreak.
