MIAMI: Activist investor Elliott Investment Management has built a stake of more than 10% in Norwegian Cruise Line Holdings Ltd, citing concerns about management and spending on events including a Katy Perry concert.
The activist investor said the company’s outlays have failed to create shareholder value and outlined a path for the shares to reach US$56.
Share of Norwegian rose 12% to $24.10 at the time of writing - its biggest one-day gain since April, giving the Miami-based company a market value of almost US$11bil.
Elliott said in a statement that the board’s succession decisions have weighed on shareholder value and questioned the recent appointment of a long-tenured board member without cruise-industry executive experience, calling for a more rigorous process.
“This is the first we are hearing from Elliott Investment Management,” a representative for Norwegian said in an emailed statement.
“We are committed to delivering durable, long-term value creation, which will be led by our recently appointed chief executive officer (CEO), John Chidsey.
“We look forward to sharing additional information on our earnings call on March 2.”
The stake disclosure follows Norwegian’s announcement last week that CEO Harry Sommer was stepping down immediately and being replaced by Chidsey, a former Subway Restaurants Inc CEO, in what the cruise line called a “strategic leadership change.”
Elliott said it has identified qualified executives to serve on Norwegian’s board, some of whose members face re-election in March.
Elliott also pointed to what it described as questionable spending, including flying guests to Reykjavik, Iceland, hosting a concert by pop star Perry and curating fine art experiences at sea, while the stock has lagged peers.
The cruise industry has benefitted from rising demand as travellers opt for lower-priced vacation options.
Royal Caribbean Cruises Ltd and Carnival Corp have reported increased bookings and higher repeat customers, underscoring resilient appetite for travel.
The strength has been reinforced by upbeat outlooks and fleet expansion plans. — Bloomberg
