LONDON - P&O has pulled out of a $400 million ($124 million) merger deal with Festival Cruises, saying it was discouraged by poor valuations of cruise companies in the United States.
Two months ago the companies revealed plans to merge its cruise businesses but yesterday P&O said it had abandoned talks
with the privately owned Festival.
However, P&O will press ahead with its own demerger in October to split its cruise businesses from its shipping and ports arm.
The British market welcomed the news of P&O's withdrawal, with shares rising 20p to close at 570p.
The planned acquisition of Festival followed in the wake of consolidation begun by the US-based world leader Carnival and Malaysia's Star Cruises, which together bought the Norwegian group NCL earlier this year.
P&O saw Festival as a route into French, Spanish and Italian-speaking markets. However, stocks in cruising companies have continued to fall since May, with Carnival shares dropping nearly 60 per cent this year.
- INDEPENDENT
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