P&O Princess Closer to Carnival Deal

Carnival and P&O Princess have entered into an agreement to combine the two companies through a dual listed company structure. The board of P&O Princess has recommended the DLC transaction to P&O Princess shareholders. As a result, all the pre-conditions to Carnival's DLC proposal of 24 October 2002 have been satisfied. The combination of Carnival and P&O Princess will create the largest cruise vacation group in the world, based on revenue, passengers carried and available capacity. The Combined Group will have a wide range of complementary brands, a significant presence in the key cruise vacation regions worldwide, an enhanced ability to attract customers from other vacation options to the cruise sector, a strong balance sheet from which to drive future capacity and growth and significant opportunities to benefit from disseminating best operating practices throughout the Combined Group. Although the companies will continue to be separate legal entities, with their own board of directors and senior management, Carnival and P&O Princess will be managed and operated as if they were a single economic enterprise. The companies' economic interests will be aligned and they will pursue common objectives. The boards of Carnival and P&O Princess will be identical and the Combined Group will be managed by a single senior executive management team. Accordingly, as part of the DLC transaction, P&O Princess intends to change its name to Carnival (UK) plc at the P&O Princess EGM. The existing well established brands operated by P&O Princess will not be affected by the change to the parent company name. Under the DLC transaction, the equalisation ratio will be 0.3004 Carnival shares for each P&O Princess share. The "look through" value per P&O Princess share under the DLC transaction is 481 pence and values the entire existing issued share capital of P&O Princess at approximately £3.3 billion. Carnival shareholders will hold approximately 74 per cent. and P&O Princess shareholders will hold approximately 26 per cent. of the equity of the Combined Group. In connection with the DLC transaction, Carnival is making the Partial Share Offer. The Partial Share Offer will enable P&O Princess shareholders to exchange P&O Princess shares for Carnival shares on the basis of 0.3004 Carnival shares for each P&O Princess share up to, in aggregate, a maximum of 20 per cent. of P&O Princess' issued share capital. The existing primary listings of Carnival on the New York Stock Exchange and P&O Princess on the London Stock Exchange will be maintained and the existing full index participations of Carnival in the S&P 500 and of P&O Princess in the FTSE 100 are expected to be retained. The Combined Group will continue to provide an investor relations program in both the US and the UK.