P&O Princess Cruises merging with US rival

Cruise liner operator P&O Princess Cruises will merge with its US rival Royal Caribbean, the company announced today.

The London-based group said the "merger of equals" ? worth £4.17 billion ($6 billion) ? would create the largest luxury cruise holiday firm in the world with 41 ships and 75,000 berths.

P&O Princess will own 50.7 percent of the new group with Royal Caribbean taking 49.3 percent of the equity value.

The merger is expected to deliver annual savings of an estimated 69.4 million pounds (dlrs 100 million) in a year's time, the company said.

P&O Princess Cruises said savings would come from marketing efficiencies, improved purchasing, combining tour operations in Alaska and office rationalization.

The combined group will employ 40,000 people. P&O Princess employs 19,000 staff, with 11,000 at sea at any one time.

The move comes 13 months after P&O Princess Cruises was demerged from ports operator P&O.

P&O Princess Cruises' chief executive Peter Ratcliffe said the industry had suffered since the 11 September terrorist attacks, but he said it had "long-term growth characteristics".

"With a high quality fleet of over 40 ships, we will have the flexibility to respond to changes in demand around the world," said Mr Ratcliffe.