Royal Caribbean, P&O Princess merge to form cruise giant

London, Nov 20: P&O Princess Cruises Plc and Royal Caribbean Cruises Ltd said on Tuesday they plan to merge to create the world’s largest cruise group and cut costs to help them sail the choppy waters of the tourism sector.

The deal values Royal Caribbean at a small premium of around two per cent — or about 34 US cents per share — above its market worth on the eve of the agreement, using prevailing exchange rates.
Each Royal Caribbean share will be equivalent to approximately 3.46 shares in P&O Princess. The merged group, which aims to challenge market leader Carnival Corp and will have a market value of about $6.0 billion, expects annual savings of over $100 million.

“It’s also a meeting of the minds. There are only three major cruise companies in the world, and this brings together two of them,” said an analyst at a leading London bank.

From a shareholder’s point of view, no money or stock will change hands, and the two firms will retain their separate listings, like oil major Royal Dutch Shell or miner BHP Billiton . “It makes sense for the two to join forces as there are considerable synergies,” said Mr Gunnar Holen, an analyst with Fearnley Fonds in Oslo.

“The exchange is close to the share prices, (but) with a small premium for Royal Caribbean. However, Royal Caribbean was traded with a discount compared to Princess, so in view of this it was only to be expected.”

— Reuters