LONDON: Britain’s P&O Princess Cruises Plc has formally backed a £3.3bil merger with sector leader Carnival after it broke ties with former merger partner Royal Caribbean last week.
P&O Princess, owner of the ship used in TV’s The Love Boat, said it expected to call a shareholder meeting in late March or early April to vote on the Carnival deal, which will create the world’s biggest cruise line, with 65 ships.
The combined company will be called Carnival, and Carnival chairman and chief executive Micky Arison will retain both of these positions in the new business. P&O Princess chief executive Peter Ratcliffe will become an executive director, while chairman Lord Sterling confirmed he would retire following completion of the deal.
The formal recommendation brings a step closer the end of a bid battle which has engulfed the world’s three biggest cruise lines for the past 15 months. The three firms have been fighting for cost-cutting alliances since a drop in business following the Sept 11, 2001, terror attacks on the United States.
P&O Princess initially backed a nil-premium merger with Royal Caribbean over an all-share bid from Carnival, believing a deal with Carnival would fall foul of regulators. But the British firm signalled it would switch sides in October after regulators in Europe and the US backed both deals, and Carnival agreed to create a dual-listed company.
Under a dual listing, two firms agree to be run as one under a unified management, but retain separate stock market listings.
This would allow P&O Princess’s mainly British institutional shareholders – who are often restricted on the amount of foreign shares they can own – to continue investing in one of the fastest growing sub-sectors of the travel industry.
P&O Princess was unable formally to recommend a deal with Carnival in October because it was liable for penalties if it broke a southern European joint-venture agreement with Royal Caribbean before January 2003. But the British firm said last week it had terminated the joint-venture agreement without incurring a penalty charge. – Reuters