First Choice in £200m cruise deal

The joint venture will compete with operators such as P&O

The world's second largest cruise firm is to take a 20% stake in the UK's First Choice Holiday company.

Royal Caribbean Cruises is to invest £200m in First Choice, which could give it a 20% stake in the company if it exercises its right as a preference shareholder.

The two are to set up a cruise line targeting the European market and expect to be selling cruises through the First Choice network from the middle of next year.

The move comes amid further consolidation in the European holiday industry, following German tour operator Preussag's purchase of Thomson Travel on Monday.

"By combining the tour operating skills of First Choice with Royal Caribbean's spread of cruise products, we are both well placed to grow our presence in the European cruise market," First Choice chairman Ian Clubb said.

The two are to invest £32m each to buy a 1,500 passenger-berth cruise ship, the Viking Serenade.

Choice suitors

First Choice has had many suitors before.

Last year both Kuoni and Airtours wanted to buy First Choice.

Kuoni's bid was blocked by First Choice shareholders while Airtours' bid was blocked by European regulators.

German operator, C&N Touristic, who had wanted to buy Thomson Travel, had also been tipped as interested in buying First Choice.

Other players want to secure their place in the European cruise market.

Last week, P&O announced it was to merge with Festival Cruises.

P&O paid £265m for Festival's Cruise business. P&O brands include Germany's Seetours and US operation Princess Cruises.