Royal Caribbean Cruises Limited has announced its planned purchase of Pullmantur SA, a Madrid-based cruise and tour operator.

The cruise line expects the acquisition to be completed by the fourth quarter of 2006, subject to regulatory approvals.

The acquisition is in line with its plans to further expand its European and Latin America operations.

Its shares rose on the news by one per cent, but Standard & Poor's Ratings Services immedi-ately placed the cruiseline, the world's second-largest, on CreditWatch with negative implications owing to its planned acquisition.

The move includes Royal Caribbean's "BBB" corporate credit rating.

Early yesterday, the cruiseline announced it would pay about US$552.8 million, plus about US$347.1 million in debt for Pullmantur.

Pullmantur, formed in 1971, is the largest cruise operator in Spain.

Its cruise division comprises five ships operating in Europe and Latin America, markets that Royal Caribbean is moving to expand in.

Pullmantur's tour operations sells travel packages to Spanish travellers - including hotel and flights - heading primarily to Caribbean resorts, and sells travel packages to Europe aimed at Latin American customers.

Pullmantur also has a small air business that operates three aircraft in support of its cruise and tour. It will be Royal Caribbean's first wholly owned European brand.