January 7, 2003
In the cruise industry's world of corporate acquisitions, today's landscape sure looks different from that of last January -- at least it does in the who-gets-P&O sweepstakes. Royal Caribbean is so out of the picture at this point that the last piece of its proposed deal -- an agreement to jointly create a cruise line specializing in Southern European voyages -- was terminated recently by P&O Princess at the earliest allowable penalty-free-cancellation date. What's next, then? This week, P&O will hold a board meeting in which officers will have the chance to officially vote for recommendation of the Carnival deal. An announcement will be made by Friday at the latest. There is little doubt, according to industry sources and to P&O shareholders, that the recommendation will be extended. In the meantime, behind-the-scenes activities include a re-look by the European Commission at the deal. It's strictly a formality, according to Carnival Corporation's Tim Gallagher, since the actual structure of the deal, from an outright acquisition to a dual-listed-company agreement, has changed since they first received European Union approval. "What the EU looks at is competition issues," Gallagher says. "And nothing is really changed there." He expects the process to take about 30 days. The U.S. Securities and Exchange Commission is also reviewing the proposed deal -- for the first time -- because of its new format as a dual-listed structure, which is unusual on American shores. Gallagher says, once again, that no problems are anticipated and that the process will take about 60 days. The Federal Trade Commission, which has waved the proposed deal through, is not taking another look. Beyond this, the more public events include shareholder meetings for both companies, which should be held in mid-March for the final vote, with the final deal-closing -- in which companies will sign final documents -- to occur in April. Ultimately, the marriage of Carnival Corporation and P&O Princess will be unnoticed to most consumers. "While it¹s a dual listed company, to anybody outside the company it will be transparent," Gallagher says. "For all practical purposes it's an acquisition, a 75-25 split on the shares, and the individual lines will operate much as Holland America operates, for instance, with great autonomy. P&O Princess will continue to be run by its executives in London, Princess Cruises in Los Angeles will continue to be run by people in L.A." Gallagher says, "What is important is the brand recognition. Carnival Corporation does not sell cruises. Their operating units [i.e. individual cruise lines operating under the Carnival Corp. umbrella] sell cruises."