P&O Merger Update

June 17, 2002

Speculation is rampant today that a ruling on the merger between P&O Princess and Royal Caribbean by the United Kingdom’s regulatory agency could come this week. The ruling from the U.K. Department of Trade, which analysts believe will be an approval, is just one step in the process for the two companies’ proposed $6 billion dollar merger. So far, the merger proposal has been approved by Germany’s antitrust authorities but other important regulatory agencies, most particularly U.S.’s Federal Trade Commission, have not announced decisions. At this point the FTC is expected to announce its verdict in late summer.

What does this mean for Carnival? At this point...nothing. Approval by the UK Department of Trade does not mean Carnival’s bid for P&O is out of the running. Currently, Carnival’s offer is in the process of being examined by the European Commission. News agencies reported last month that there were problems with it but Carnival responded by saying it would sell off parts of the combined Carnival/P&O line if necessary. At the same time Carnival absolutely quenched speculation that it would be willing to sell-off Cunard.

Ultimately, the most important regulatory decision will from the U.S. because the cruise market is bigger there than other parts of the world.