WASHINGTON -- Both Carnival Corp. and Royal Caribbean Cruises Ltd.
are free to pursue their respective merger plans for P&O
Princess Cruises, the Federal Trade Commission ruled.
In a 3-2 vote, the FTC said it supported staff and bureau
recommendations allowing both proposed transactions to proceed: a
merger-of-equals between RCCL and P&O Princess, currently the
second- and third-largest cruise companies, and a hostile takeover
of P&O Princess by the largest cruise company, Carnival
Corp.
In a statement released after the FTC vote late on Oct. 4, the
commission said the issues presented by the combinations were
"highly complex."
After its 10-month evaluation, the commission said that although
cruises do compete with the land-based vacation market for guests,
"the cruise lines' primary competitive focus is on each other."
But the commission concluded neither merger would create an
anticompetitive environment within the cruise market.
And, it said, "after either transaction, there still will be two
large competitors and a substantial fringe that will compete with
the merged entity and could constrain any unilateral attempt by the
merged firm to increase price or reduce capacity."
Shortly after the FTC decision, the P&O Princess board of
shareholders broke its longstanding silence and agreed to enter
into talks with Carnival to discuss a possible dual-listed company
(DLC) structure.
"After consulting with its advisors, the board has concluded
that a DLC combination with Carnival is both feasible and
financially more attractive than the agreed DLC combination with
Royal Caribbean," a statement from the company said.
It added it also prefers a DLC structure to Carnival's original
share exchange offer, mainly because some U.K. shareholders would
be unable to hold Carnival's U.S. shares.
In the meantime, P&O Princess said that it continues to
recommend a merger with RCCL, and said it will reconvene the
adjourned extraordinary general meeting before Nov. 16, the
termination date of their agreement with RCCL.
Carnival said it was "pleased by the FTC's decision." RCCL could
not be immediately reached for comment.