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EDITIONS
Friday, 25 October, 2002, 15:59 GMT 16:59 UK
Carnival cruises towards P&O deal
P&O Princess's Ocean Princess
P&O has had to pay to break-up fee to Royal Caribbean
A bitter year-long battle between two of the world's biggest cruise liners looks set to end with P&O Princess being taken over by its rival Carnival.


We remain today as convinced as ever that the pairing of our two companies would be a great partnership

Richard Fain, Royal Caribbean chief executive
The two companies reached a 3.5bn ($5.4bn) deal after two weeks of negotiations.

Carnival clinched it by agreeing to create a company listed on both sides of the Atlantic.

The so-called "dual listing" was a condition P&O Princess had previously used to refuse Carnival's takeover offer.

Instead, P&O, owner of the ship used in the Love Boat TV series, had been gunning for a merger with its smaller US rival, Royal Caribbean.

Brand names stay

But on Friday P&O chief executive Peter Ratcliffe said the board had decided that Carnival's latest offer was "financially superior", and it was withdrawing support for the Royal Caribbean deal.

The dual listing would allow all shareholders to retain an interest in the new company, he added.

The new company is expected to be called Carnival but P&O's brands - P&O Cruises, Swan Hellenic and Ocean Village - will remain.

Mr Ratcliffe said he did not think the deal would lead to significant job losses.

"There are seven million people cruising in the US and I believe there's still a lot of growth there.

"But what's more exciting is that in the rest of the world, people are only starting to discover cruising.

"The industry is growing and I imagine there will many opportunities for staff," he added.

Share premium

P&O said it had amicably ended its joint venture agreement with Royal Caribbean and had paid a $62.5m break-up fee.

Richard Fain, chairman and chief executive of Royal Caribbean, said: "Clearly, we regret that the board of P&O Princess is taking this action.

"We remain today as convinced as ever that the pairing of our two companies would be a great partnership and a great business.

A merger of cruise operators seemed a suitable solution to the slump in business following the 11 September attacks which hit the whole of the travel industry.

But when P&O Princess provisionally agreed a merger with Royal Caribbean late last year, Carnival - owner of the Cunard line - gatecrashed the party.

It was only when US and European competition regulators cleared both deals earlier this month that P&O agreed to talk to Carnival for the first time.

Carnival's new offer values P&O Princess at 504 pence per share, 9% higher than the closing price of P&O's shares on Thursday.

But on Friday shares closed 3 pence lower at 461p.

 WATCH/LISTEN
 ON THIS STORY
By the BBC's Oliver Woods
"P&O Princess began life as the Penuinsula and Oriental line in the hey day of sophisticated sea travel"
The BBC's Adam Kirtley
"Royal Caribbean will be the one left dockside"
See also:

19 Jun 02 | Business
27 May 02 | Business
18 Feb 02 | Business
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