Monday, July 17, 2000

P&O and Festival merger is off

Citing "the continuing low valuations of cruise companies arising from current stock market perceptions in the U.S.," P&O and the Festival Cruises group have called off their proposed merger.

The two groups have instead decided to develop their cruise businesses separately.   P&O is planning to spin off its cruise division--which includes Princess Cruises, P&O Cruises, and Germany's Aida Cruises--later this year. Festival's cruise operations would have been folded into this new company. Instead, it "will continue implementing its own strategy for expansion," including the delivery in 2001 and 2002 of two new ships currently under construction at Chantiers de l'Atlantique.

Commenting on the announcement, P&O Chairman Lord Sterling said:  "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.   I have great admiration for Festival Cruises and its dynamic management, and continue to believe in its vision.  I look forward to the prospect of working with Festival in the future.  For its part P&O will continue to invest strongly in its brands throughout the world."

Festival Chairman George Poulides said:  "Despite our decision that a merger is not the best option for either party, we remain friends.   P&O is a prestigious name in cruising and we look forward to developing opportunities that will benefit both companies.   Festival has an exciting vision for the future.   We remain eager to implement our expansion plans and to continue our success throughout Europe."

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