OUTLOOK: P&O's Cute Game
warner, jeremy, The Independent (London, England)
UNLESS US regulators unexpectedly drop a spanner in the works, it looks as if Carnival will be sailing home to victory in the two-way battle for the hand of P&O Princess Cruises. However, to do so it will first have to make some key changes to its offer. Neither eventuality was in the script when P&O began its transatlantic voyage all those months ago by signing up to an agreed merger with Carnival's US rival, Royal Caribbean. Carnival is so much bigger than Royal Caribbean in key markets that P&O took the view any bid by Carnival was unlikely to be allowed, either in Europe or the US.
Well, it hasn't worked out that way, and if, as expected, the US follows the Competition Commission in the UK and Competition Commissioner in Brussels in saying further concentration of the cruise market doesn't much matter, whoever eventually merges with whom, then Carnival, with the far superior fire power, is likely to win. It all rather calls into question the P&O board's judgement in signing up to the Royal Caribbean deal in the first place. Was P&O's intention a cosy little stitch up? That's what Carnival's chairman, Micky Arison, has always believed.
If the P&O board had had its way, shareholders would by now have voted through lockout terms with Royal Caribbean. Carnival would have been shut out for good. Instead, shareholders rebelled and adjourned the vote until the outcome of the regulatory deliberations were known. It looks as if they are right to do so. The terms of the original merger agreement with Royal Caribbean are so restrictive that P&O has never been able properly to explain its position. …