Elliott Management disclosed on Tuesday that it has built up a stake of more than 10% in Norwegian Cruise Line Holdings. The activist investor is pushing for management and board changes at the cruise operator to turn things around.

Morning trading saw a 10% increase in the shares of the company. Stocks fell by more than 13% in the past year.

Miami-based Carnival Corp. has been struggling with stiff competition, cost pressures and low demand for its sea cruises. Meanwhile, its competitors, Royal Caribbean, and Carnival Corp., have seen their profits increase.

According to LSEG data, Elliott is now one of the top three investors in the company, alongside Capital International Investors, The Vanguard Group and Capital International Investors.

Elliott said that the current board failed to meet their basic responsibilities. He also criticized the selection of management over the past decade, which included the appointment last week of John?Chidsey as CEO, the former Subway Restaurants boss.

The activist investor is now seeking new independent directors who have relevant industry and operational experience.

Sources familiar with the matter say that Elliott has approached Adam Goldstein, former Royal Caribbean President and Operating Chief. The investor is looking for a more disciplined marketing approach and wants to fix the itinerary.

Sources confirm that the deadline for nominations is March 13.

According to a letter and presentation sent to the company, the activist investor also pushed for Norwegian's new business plan which would capitalize on revenue opportunities available and restore cost discipline.

Norwegian Cruise Line Holdings released a statement saying that they were committed to creating long-term, durable value, led by John Chidsey, the newly appointed CEO.

Elliott stated that it expected to reach a "constructive solution" with Norwegian and noted that it was prepared to present its case directly to the shareholders. The company believes that these actions will help to boost the stock price up to $56 per share or 159% more than its current level.

Patrick Scholes is an analyst at Truist Securities. He said, "We see the biggest challenge as being a "quick fix", since many of the problems that plagued NCLH are not something that can be fixed overnight. They are the result of years of planning." (Reporting and editing by Anuja Mistry, Bengaluru)

(source: Reuters)