TUI has announced its plans to sell Hapag-Lloyd Cruises to the TUI and Royal Caribbean Cruises joint venture (JV) TUI Cruises in a €1.2bn ($1.3bn) deal.

The deal is expected to close by the middle of this year and is subject to closing conditions and regulatory approvals.

Established in 2008, Royal Caribbean Cruises and TUI each own a 50% stake in the joint venture.

The transaction is expected to accelerate the expansion of the JV. Owing to decreased global shipbuilding capacity, the three deliveries of TUI Cruises’ Mein Schiff fleet are expected to be delivered by 2023, 2024 and 2025 respectively.

The Hapag-Lloyd Cruises merger will help TUI participate in the growth of the cruise industry with reduced capital expenditure.

TUI CEO Fritz Joussen said: “The ships’ identities, service, quality and customer experience will remain as individual and unique as they are today. This will create significant advantages for the group, for our expansion and for our investments.”

Following the merger, the cruise company will have a total of 12 ships in its combined fleet.

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The JV will serve the premium German sector while Hapag-Lloyd Cruises will continue to serve the luxury and expedition ship demand with two luxury ships and three expedition ships.

Joussen added: “Products and brands such as MS Europa and MS Europa 2 have international potential and appeal.

“Going forward, this will enable us as shareholders to take a capital-light approach to financing the ships and international growth within a joint venture framework.”

In October last year, Hapag-Lloyd Cruises received the Hanseatic Inspiration luxury cruise vessel from Norwegian shipbuilder Vard Marine (VARD).

In January, TUI Cruises received the New Mein Schiff 2 vessel from the Meyer Turku shipyard.