Royal Caribbean reportedly nearing $3B deal for 50% stake in Sandals Resorts

Royal Caribbean Group is reportedly closing in on a multibillion-dollar deal that would give the cruise giant a major foothold in the all-inclusive resort business.

According to reports from the Financial Times and CNBC, Royal Caribbean is in advanced talks to acquire a controlling stake in Sandals Resorts International, the Caribbean hospitality company behind Sandals Resorts and Beaches Resorts.

CNBC reported that Royal Caribbean is nearing a US$3-billion deal for a 50 per cent equity stake in Sandals. 

The Financial Times, citing people familiar with the discussions, first characterized the proposed transaction as the acquisition of a majority stake at a valuation of more than US$6 billion.

The precise structure has not been confirmed, and talks could still fall apart.

Neither Royal Caribbean nor Sandals had publicly commented on the reports as of Tuesday.

If completed, the acquisition would reportedly be the largest transaction in Royal Caribbean's history and would significantly expand the company's presence beyond cruising.

From ships to all-inclusives

The deal would give Royal Caribbean access to Sandals' portfolio of adults-only all-inclusive resorts across the Caribbean, along with Beaches Resorts, its family-focused sister brand.

Sandals has properties across destinations including Jamaica, Saint Lucia, Barbados, Curaçao, Grenada, Antigua, the Bahamas, and Saint Vincent and the Grenadines.

For Royal Caribbean, the acquisition would provide an established land-based vacation platform and create opportunities to cross-sell resort stays to its substantial cruise customer base.

The company has already been expanding its vacation offerings beyond the traditional cruise ship experience.

In addition to its fleet, Royal Caribbean operates private destinations for cruise guests, including Perfect Day at CocoCay in The Bahamas, with additional destination projects under development.

A Sandals investment, however, would represent a much larger move into vacations that aren't necessarily tied to a cruise itinerary.

Stewart family could retain stake

Under the deal being discussed, members of the Stewart family would retain equity in Sandals while Royal Caribbean would become the controlling shareholder, according to the Financial Times.

Royal Caribbean could eventually acquire full control of the company, the report also said.

Sandals was founded in 1981 by Jamaican businessman Gordon "Butch" Stewart, who passed away in 2021.

The company has explored a sale on several occasions over the past decade. Stewart himself reportedly pursued a sale before his death as part of estate planning, but that process was interrupted by the COVID-19 pandemic.

Royal Caribbean shares slide

Investors reacted negatively to reports of the potential acquisition, with Royal Caribbean shares falling sharply Tuesday as details of the talks emerged.

The possible Sandals deal comes as Royal Caribbean continues to broaden its reach in the vacation market following the cruise industry's dramatic post-pandemic rebound.

While demand for some European sailings has softened, the Caribbean has remained a comparatively strong part of Royal Caribbean's business.

An agreement with Sandals could reportedly be reached within days, although discussions remain ongoing and there is no guarantee a transaction will be completed, reports the Financial Times.

Neither Royal Caribbean nor Sandals have commented on the reports. 

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