NEW YORK -- P&O, the British-based parent of Los Angeles-based
Princess Cruises, called off its planned purchase of Greek cruise
operator Festival Cruises, citing "low valuations of cruise
companies arising from current stock market evaluations" in the
In May, P&O announced it would buy Festival in a $600
million deal. P&O, which is publicly traded in London, will
continue with its plans to split the company's cruise operations
from its shipping and ports businesses, said company officials.
P&O's shares have fallen 23% since early June prior to
warnings from U.K.-based analysts that extra capacity and U.S.
competition would affect cruise-industry revenues.
"Taking everything into account, we both arrived at the
conclusion that this was probably not the best time to take the
step of joining forces," said Lord Sterling, P&O's chairman, in
Festival chairman George Poulides said the companies would
"remain friends" and look to develop "opportunities to benefit both
Festival will continue its plans to introduce new ships in 2001
and 2002, said Poulides.
Shares of cruising's largest U.S.-traded companies, Carnival
Corp. and Royal Caribbean Cruises Ltd., have fallen nearly 60%
since February amidst analysts' fears of an oversupply of new