P&O Princess Cruises plc and Royal Caribbean Cruises Ltd. (RCL)
have agreed to merge their companies in a deal approaching $6 billion, a move that will effectively create the world's largest cruise vacation group.
The merger, spurred by an already softening economy and the September 11 terrorist attacks that have left cruise companies, among other transportation operators, grappling to fill ships, involves two companies with an aggregate revenue of more than $5 billion in the 12 months preceding September 30, 2001.
The new company, which will pose a serious threat to Carnival Corp. - to now the world's largest cruise shipping organization - will commandeer 41 ships and some 75,000 berths, with another 14 ships and 30,000 berths coming on line in the next three years. The combination will include such well known brands as Royal Caribbean, Princess, Celebrity, P&O Cruises, Swan Hellenic, AIDA and A'ROSA
The combined fleet has an average age of six years and possesses the world's largest ships.
Richard D. Fain, Chairman and CEO of Royal Caribbean Cruises and Chairman and CEO designate of the combined group, said:
"The combination of Royal Caribbean and P&O Princess
will maximize our ability to take advantage of the long-term potential of our industry. This deal brings together well-known brands and the youngest fleet in the industry to create a strong customer offering that will drive future growth both in existing and new markets. It also brings near-term cost savings and increased efficiencies that will help us respond to any short term challenges while building a stronger group. I am confident that shareholders in both companies will see real value created as a result."
Peter Ratcliffe, CEO of P&O Princess Cruises and Managing Director and COO designate of the combined group, said: "Our industry has sustainable long term growth characteristics, despite the impact of recent events on short term trading. The key indicators of demographics, penetration, high levels of customer satisfaction and trends in leisure spend point to significant growth over the long term and the increasing globalization of the industry. We will be well placed to benefit from this while reducing unit costs. With a high-quality fleet of over 40 ships, we will have the flexibility to respond to changes in demand around the world, open new markets, maximize the potential of our brands and benefit our customers and shareholders alike. These operational and strategic advantages will underpin this combination, both now and in the longer term."
Lord Sterling of Plaistow, Chairman of P&O Princess Cruises, said: "This is an outstanding opportunity for both companies and a natural strategic combination. We obviously know each other well and I feel that our European and American heritages are a key to the future. Having personally been involved in the creation of P&O Princess out of the great liner division of The Peninsular and Oriental Steam Navigation Company, when I step down as Chairman in the next few months, I will have the pleasure of knowing that our people, both at sea and on shore, will have a tremendous future working together in this new global cruising enterprise. I have no doubt whatsoever that it will go from strength to strength."
Schroder Salomon Smith Barney and Credit Suisse First Boston (Europe) Limited which are regulated in the United Kingdom by The Securities and Futures Authority Limited, are acting for P&O Princess in connection with the proposed combination and no-one else and will not be responsible to anyone other than P&O Princess for providing the protections offered to customers of Schroder Salomon Smith Barney and Credit Suisse First Boston (Europe) Limited nor for providing advice in relation to the proposed combination.
Goldman Sachs International and Cazenove & Co. Ltd, which are regulated in the United Kingdom by The Securities and Futures Authority Limited, are acting for Royal Caribbean in connection with the proposed combination and no-one else and will not be responsible to anyone other than Royal Caribbean for providing the protections offered to customers of Goldman Sachs International and Cazenove & Co. Ltd nor for providing advice in relation to the proposed combination.