Royal Caribbean Cruises (NYSE:RCL) and P&0 Princess Cruises (NYSE:POC) the second and third largest cruise companies in the world, announced yesterday that they plan to merge, a move that would create the world's largest cruise group.
The controlling interest in Royal Caribbean is held by the Ofer family, which holds a number of companies in Israel including United Mizrahi Bank and the Israel Corporation. The merger pushes Carnival Corp, which is controlled by the Arison family, controlling share holders of Bank Hapoalim, off the top spot.
The merger would create a 41-ship fleet with 75,000 berths and generate annual savings of $100 million. Royal Caribbean shareholders will own 49.3 percent of the combined entity, with the remaining shares in the hands of P&0 investors.
This is not the first time that Royal Caribbean has outdone Carnival. In 1997 it beat Arison's cruise company in a bid to buy the controlling interest in Celebrity Cruises, another company with an Israeli connection. The Recanati family was the majority share holder in the company.
The September 11 attacks on the United States sent shares in cruise companies tumbling and analysts see this as a major factor behind the merger. The deal was well received by investors, with P&O gaining 16 percent and Royal Caribbean 10.5 percent to send the combined value of the companies to $7 billion.
The merger will have to receive the approval of antitrust authorities in the United States, Britain and Germany.