Last Updated 17 Aug 2020

Completion of acquisition

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Essay type Research
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  1. Despite all the arguments posed by the parties are denied, on July 24, 2002, the commission delivered a final conclusion that the acquisition between Carnival Corporation and P&O Princess plc will not cause competition in the common market to be disturbed. The conclusion is mainly based on the Commission’s calculation that combined national market share between the parties in each country of the customer would not exceed 60 %. The worldwide share of the market owned by the parties (by customer count) in the year 2000 would combine to be only 32% (Carnival 19% and POPC 13%).
  2. Post-Acquisition Consolidated Performance
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  4. Market Share By July 8, 2004, the company has created a record among the cruise industry. The combined enterprises owned 77 ships operating under 12 cruise brands. The Miami based company has now 47% of the world’s cruise operator market share. Timothy Conder, a business analyst, believes that the cruise industry remains in its infant stages, accounting for only 2 % of global tourism. Only 16% of North Americans (averagely 70 % of the world’s cruise market) and less than 1% of Europeans (20% of the world’s cruise market) have ever taken a cruise, which indicates a significantly wide room for growth. The company has built 11 ships during 2003 only.
  5. Financial Performance Having trough some of its worst in the previous 5 years, in 2004, the company, after a year since its acquisition of the P&O Princess Cruise displayed tremendous financial performance. The company displayed $332 million of net income and 41 cents earnings per share (which was 6 cents above analysts’ estimates. The net Revenue yields grew 13. 2% on an increase in capacity, which indicated strong pricing power. These results were considered amazing due to the rising oil price and global violence wasn’t enough to eliminate profit. Carnival’s stock jumped 128% from $20. 60 in mid-2003 to $47 on July 7 as the tickets sold leaped 48% to $7. 4 billion and non-ticket revenue jumped 50% to 2. 1 billion. Below is Carnival’s 3 years restated summary of income statements. In two years, its sales, operating income, and net income were practically doubled, its stockholder's related ratios also show a significant increase compared to last year. The financial statement displayed that the company has obviously recovered from its previously declining performance trend. The year 2004 alone reflected that the acquisition of Carnival plc, have impacted in the most positive way for the company’s performance. Despite the issues of increasing oil price and global insecurity, the company achieved amazing results unpredicted even by analysts.
  6. The current and Debt/Equity ratio shows that the company’s recent proportion of short/long term debt to assets is a lot more preferable to build stockholders’ and creditors’ confidence. IV. Conclusion Mergers and acquisitions have been companies’ tools of development. After achieving a certain level of growth, a company starts to think about a merger with its rivals or acquiring its vertically related parties. The overall purpose of the activity is to make one’s business stronger or just to gain the company’s share of the market. Carnival and Princess are some of the most famous acquisitions in decades. Both separate companies suffered from factors beyond their control and displayed an immensely declining trend of performance. But performance reports in a year’s time since the acquisition elaborated that the combination of the two, resulted in an amazing increase of consolidated company performance. Some believe that the amazing achievement was due to strong market demand and some thought that it was due to the infant nature of the industry. But there are some who believe that it was carnival’s structure of good corporate governance that delivered success to the merger. International acquisitions are known to be sources of corporate governance complications for decades. Without a strong and open for improvement structure of corporate governance, the abundant benefits of the acquisition written on paper would be rather illusions and fictions.

Reference

  1. Ayer, Sanjay. 2005. “Carnival PLC ADR vs. Carnival Corp”. Morningstar [online]. Retrieved May 9, 2005, available at http://morningstar.aol.com/PoweredBy/doc/news/1,3496,128105,00.html? CN=NSC124 “Carnival”. 2005.
  2. http://www.businessweek.com/bw50/2005/company/CCL.htm “Carnival CCL”. 2005.
  3. http://quicktake.morningstar.com/Stock/search ‘Commission Decision’. 2003.

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Completion of acquisition. (2018, Feb 06). Retrieved from https://phdessay.com/completion-of-acquisition/

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